Singapore has slipped for the third year running in a key global competitiveness study, coming in fifth behind the United States, Switzerland, Hong Kong and Sweden.
The Republic dropped a spot in the 2013 IMD World Competitiveness poll from the previous year, dragged down by rising costs and an economic slowdown.
This year's showing is its lowest ranking since 2002, when it was eighth. Singapore topped the charts in 2010, but slid to third in 2011 and fourth last year in the annual study of 60 economies conducted by notable Swiss business school IMD.
The US regained the top spot this year, thanks to a rebounding financial sector, an abundance of technological innovation and successful companies.
IMD World Competitiveness Centre director Stephane Garelli told The Straits Times: "Singapore has always been very competitive, but this time, it has been a little bit impacted by the slowdown of markets in the US, Europe and China. The (economic) growth has been disappointing by Singapore's standards."
The IMD study is one of two global competitiveness polls which are keenly monitored by businesses and policymakers.
The other, the World Economic Forum Global Competitiveness Report, ranks Singapore as the second most competitive economy after Switzerland.
The IMD report uses 333 criteria to determine a country's competitiveness, with two-thirds based on hard economic data like gross domestic product and productivity, and a third on opinion surveys with the local and international business community.
Singapore excelled in efficiency of government and business, and topped the rankings in factors like ease of doing business, higher education achievement and quality of air transport.
But similar to last year, the Republic fared poorly in cost of living, coming in 58th and falling from 57th last year. It also did badly in total public expenditure on education (55th) and total health expenditure (54th).
Economists and the local business community said Singapore's slip in competitiveness was not surprising, given the rising living and business costs in the last few years.
They even warned that Singapore's ranking will likely slide further in the next few years.
CIMB regional economist Song Seng Wun said: "The ranking may slip for one or two more years before improving, as restructuring and a productivity improvement don't happen overnight."
Singapore Business Federation chief operating officer Victor Tay said: "In the recent first-quarter economic release, there are signs of escalating business costs. If these are not carefully managed, our businesses will not be able to ride on the emerging growth, and Singapore's ranking may even decline further."
The experts tip that a successful productivity push will be crucial in boosting Singapore's competitiveness.
OCBC Bank economist Selena Ling said: "Inflation probably peaked last year, so we should see some improvement on that front. Hopefully, our productivity numbers improve and offset cost of living issues."
