SINGAPORE - Singapore leapt six places from 2013 to top an index that ranks the business growth environments of the 60 largest economies in the world.
Grant Thornton's Global Dynamism Index 2015 is based on data collected by the Economist Intelligence Unit, and measures a country's overall growth potential in five areas - business operating environment, financing environment, labour market, technology, and market growth.
Israel ranked second on the Index, with Australia, Finland and Sweden completing the top 5.
But Singapore came out tops because of:
1. Its political, legal and governance framework
High scores from its political stability, low level of legal and regulatory risk, high quality of the financial regulatory system, and government encouragement of private enterprise and competition
2. Access by firms in Singapore to medium-term financing and the depth of the domestic banking market
3. Low corporate tax burden
4. Low barriers to international trade and exchange flows
5. Low unemployment
6. High investment in IT
But Grant Thornton noted that Singapore also faced shortcomings in three main areas: volume of mergers and acquisitions, labour productivity and an ageing population.
"The Index's findings accord with our own experience of operating here in Singapore, said Peter Allen, CEO of Grant Thornton Singapore.
"This is a strategically crucial market for us where the very stable political, legal and regulatory framework makes it a natural hub for our clients' operations in the region.
"Still, there are some areas for improvement. Singapore's labour productivity growth remains low, scoring only slightly better than Greece. The other weak spot is inward M&A, which has been held back by disparities in pricing expectations."
He added: "Although the current relative softness of the Singapore dollar may help this, we fear that vendors of Singaporean businesses may need to adjust their price expectations over the next year or two."