Hong Kong, the Netherlands, Switzerland make up the top five
WEF calls for fiscal action to help boost productivity
Singapore Tops U.S. in World Economic Forum Competitiveness Report
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The U.S. dropped from the top spot in the World Economic Forum’s annual competitiveness report, losing out to Singapore.
Hong
Kong, the Netherlands and Switzerland made up the rest of the top five,
according to the WEF survey published on Wednesday. On the U.S., it
noted growing uncertainty among business leaders and said trade openness
has declined.
The forum focused its report on continued low productivity
growth a decade after the financial crisis, calling this the $10
trillion question -- the amount injected by the world’s four major
central banks through 2017. In line with others, its view is that while
monetary stimulus helped pull the global economy out of recession, it wasn’t the solution for all problems.
Global Winners
Singapore takes the top spot in annual WEF survey
Source: World Economic Forum
With a new slowdown emerging, the WEF said fiscal policy has been underused. It joined the chorus calling for more government support, particularly in investment to boost productivity.
The WEF also said central banks must take some blame for weak
productivity, as their trillions of stimulus keep zombie firms alive,
sometimes crowding out stronger businesses. Given monetary policy
resources are so depleted, it said investment-led stimulus would be an
“appropriate action to restart growth in stagnating advanced economies.”
“Although
loose monetary policy mitigated the negative effects of the global
financial crisis, it may also have contributed to reducing productivity
growth by encouraging capital mis-allocation.... As monetary policies
begin to run out of steam, it is crucial for economies to rely on fiscal
policy and public incentives.” -WEF Global Competitiveness Report 2019
While
the U.S. drops down to second in the survey of 141 countries, the WEF
said it remains an “innovation powerhouse,” ranking first in business
dynamism and second on innovation capability. Also in the top 10 were
Japan, Germany, Sweden, the U.K. and Denmark. Canada and France were
ranked 14th and 15th respectively, while China was in 28th place.
Crawling or stalling?
That’s the question hanging over the U.S. economy amid fresh evidence
the once-hot labor market is losing steam. Traders of fed funds futures
slightly reduced the amount of easing they expect from the U.S. central
bank this year and marginally trimmed their expectations for a third
straight rate cut this month. Bloomberg's Jonathan Ferro sat down with
JPMorgan's Oksana Aronov, Schroder's Lisa Hornby and Gershon Distenfeld
of AllianceBernstein to debate whether the jobs report did anything to
impact the Fed's path forward. (Source: Bloomberg_TV)
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