Business executives who were asked to list 5 indicators from a list of 15 that they perceived as the key attractiveness factors of the SA economy, chose effective legal environment (79.2%); quality of corporate governance (68.8%); cost competitiveness (64.6%); reliable infrastructure (58.3%) and access to financing (58.3%). At 0%, they listed the competency of government as the least attractive for the economy.
In the bottom ten with South Africa are four Latin American countries, notably Brazil and Venezuela which are facing similar challenges as South Africa. Jordan, Peru, Argentina, Greece, Croatia, Ukraine and Mongolia complete the bottom ten.
South Africa was the only African country that made it into the rankings.
South Africa’s economic performance gradually improved from 57 index points in 2012 to 49 in 2015, but fell to 54 in 2016.
Government efficiency stayed the same at 40 index points, while business efficiency improved from 52 to 47 and infrastructure from 55 to 54.
The IMD World Competitiveness Centre listed South Africa’s challenges for 2016 as:
– Lack of commitment to skills development, which leads to a high unemployment rate;
– Growing poor public sector service delivery and perceived corruption;
– Climate change and water scarcity threatening the sustainability of growth;
– Education outcomes are poor on average and hugely uneven; and
– Low business confidence and declining household demand.
South Africa’s overall performance in the last four years moved in a narrow band from a high of 50 in 2012 to 52 currently.
The biggest improvements in the overall performance of the SA economy were recorded in energy infrastructure, stock market capitilisation, ICT service exports, labour relations and ease of doing business among others.
Among the drags on the economy were real GDP growth per capita, adjusted consumer price inflation, resilience of the economy, exchange rate and cost of capital.
The annual World Competitive Rankings, now in its 27th year, also showed that the US was no longer the most competitive economy in the world after being overtaken by China Hong Kong and Switzerland.
The sheer power of the economy of the US is no longer sufficient to keep it at the top of the ranking, which it has led for the past three years, the IMD World Competitiveness Centre said in a statement.
The 2016 edition ranks China Hong Kong first, Switzerland second and the US third, with Singapore, Sweden, Denmark, Ireland, the Netherlands, Norway and Canada completing the top ten.
The rankings show that 28 countries improved their standing, 23 slipped while ten remain unchanged.
Each ranking is based on analysis of over 340 criteria derived from four principal factors: economic performance, government efficiency, business efficiency and infrastructure.
Responses from an in-depth survey of more than 5 400 business executives, who are asked to assess the situation in their own countries, are also taken into consideration.
Key attractiveness indicators for the SA economy as perceived by business executives:[Source: IMD World Competitiveness Centre/News24]