Ireland has fallen four places to 29th on the list of global competitiveness and its banking system is the least sound of the 139 countries surveyed, according to the World Economic Forum's annual rankings.
Switzerland remains the world's most competitive economy, according to the Global Competitiveness Report 2010/2011.
Ireland was placed 25th out of 139 countries in last year's survey, a fall of three places on the previous 12 months. It is now rated between Brunei Darussalam and Chile and two places ahead of Iceland, which dropped five places in the latest survey.
The report said Ireland’s decline in rank “is attributable to a weakening macroeconomic environment as well as continuing concerns related to financial markets”. Macroeconomic stability in Ireland plummeted from seventh two years ago to 45th last year and 95th in the current survey.
Under the category of “soundness of banks”, Ireland ranks last of the 139 countries, while it achieves a lowly 117th for ease of access to loans. That said, the strength of investor protection in Ireland is the fifth best in the world.
The Government's budget balance is rated 130th, and the flexibility of wage determination is just 128th of the countries surveyed. The most problematic factors for those doing business in Ireland are listed as access to financing and inefficient government bureaucracy.
Despite these poor ratings, the report says Ireland continues to benefit from a number of strengths, including an “excellent health and primary education” system, which is ranked 10th of the countries surveyed. The country also has strong higher education and training (23rd), and well-functioning goods and labour markets, which are ranked 14th and 20th, respectively.
These factors have “fostered a sophisticated and innovative business culture” which sees Ireland ranked 20th for business sophistication and 22nd for innovation. Ireland’s infrastructure has improved, jumping from 52nd place into 33rd.
The United States has fallen from second to fourth after losing the top spot last year, with Sweden and Singapore leapfrogged the US into second and third place respectively.
Germany, which climbed from seventh to fifth, is the highest ranked country in the euro zone. Japan, Finland, the Netherlands, Denmark and Canada make up the rest of the top 10. The UK is in 12th place, France is rated 15th and Russia is in 63rd spot.
Spain has fallen nine places from last year to 42nd, while Portugal is down three to 46. Italy is unchanged at 48.
Greece is regarded as the least competitive of the 27 European Union member states, with its "dismal performance" this year seeing it slip 12 places to 83rd on the rankings.
The lowest rated countries of the 139 listed are Zimbabwe, Burundi, Angola and Chad.
The rankings are based on a dozen measures of competitiveness, including institutions, infrastructure, health and education, market size and the macroeconomic environment. The report also factors in a survey among business leaders which assesses each government's efficiency and transparency.
The Geneva-based forum said Switzerland retained first place due to its high capacity for innovation and its sophisticated business culture. It said the US slipped in the ratings because of growing macroeconomic imbalances, a weakening of public and private institutions and concerns about the state of its financial markets.
China moved up two places to 27th and was the most competitive of the major emerging economies. "China continues to show great strength, not in terms of the size of the economy but in terms of the quality of the economy," said the forum's managing director and chief business officer Robert Greenhill.
He attributed China's climb up the rankings to its large market size, strong economic management and improved financial markets.
