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| Business Center (CNBC Asia) (Photo credit: Wikipedia) |
Assistant Producer, CNBC Asia
The United States has slipped further down a global ranking of the world's most competitive economies, according to a World Economic Forum (WEF) survey released on Wednesday.
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New York City, financial capital of the United States
The world's largest economy, which was placed 5th last year, fell two positions to the 7th spot - marking its fourth year of decline.
A lack of macroeconomic stability, the business community’s continued mistrust of the government and concerns over its fiscal health were some of the reasons for the downgrade, according to the annual survey.
"A number of weaknesses are chipping away at its competitiveness...the U.S. fiscal imbalances and continued political deadlock over resolving these challenges," said Jennifer Blanke, Economist at the Geneva-based WEF.
Political deadlock over reducing the unsustainable federal government budget deficit – projected to hit $1.1 trillion this year – prompted Standard & Poor’s to downgrade the country’s credit rating by one notch to AA+ from AAA last August.
A mix of U.S. tax hikes and spending cuts – referred to as the "fiscal cliff" - are set to come into force in January unless lawmakers reach a compromise for avoiding them.
The survey, which has been conducted annually for over three decades, ranks the competitiveness of 144 countries based on 12 key indicators including infrastructure, macroeconomic environment, labor market efficiency and innovation.
“If you look at competitiveness, what we are talking about is productivity. It’s countries that are productive that can support the sorts of rising living standards and high wages that everyone is looking for,” Blanke told CNBC.
Despite declining in the overall ranking, the forum highlighted that the U.S. remains one of the world’s top innovators – supported by an “excellent” university system - and continues to offer vast opportunities because of the sheer size of its domestic economy.
Switzerland and Singapore retained their positions as the most competitive economies, coming in 1st and 2nd, respectively.
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