Switzerland, Singapore, and the U.S. are once again taking the top spots in the latest edition of the World Economic Forum's Global Competitiveness Report, which combines 113 indicators that the WEF believes matter most for countries' productivity.
Here's a look at this year's top 10:
Switzerland
Singapore
United States
Germany
Netherlands
Japan
Hong Kong
Finland
Sweden
United Kingdom
In terms of movement, the top three remained in place, but there were some larger moves elsewhere on the full list of 140. The Netherlands was the biggest gainer in the top 10, moving up to No. 5, from No. 8 in the previous report. Brazil saw the biggest fall, tumbling 18 spots to No. 75 and taking the title of the worst performer among BRICS countries. However, India was a bright spot, climbing 16 places and coming in at No. 55.
Competitiveness is defined as "the set of institutions, policies, and factors that determine the level of productivity of an economy, which in turn sets the level of prosperity that the country can earn." These indicators include areas such as infrastructure, innovation, and the macroeconomic environment.
While the report says a majority of advanced economies have recovered from the financial crisis, there are some troubling signs of a new normal by which the global economy isn't growing as fast as it did historically.
If you compare productivity growth over the past 10 years to the prior decade, for instance, many of the dominant countries in the world have seen declines, with India and China being the exceptions.
When you break out the seven pillars that the WEF's competitiveness indicators are based on, you can see how far countries have to climb in order to match the best performers in each category.
Although the U.S. didn't take a single No. 1 spot, it had high marks in the areas such as innovation, at 4th place.
The US economy grew faster than previously estimated in the second quarter of the year, according to revised official figures.
The US Commerce Department said the economy expanded at an annualised pace of 3.9%, rather than 3.7%.
The growth in the economy overall was due to strong consumer spending, business investment and residential construction.
It rate is much higher than the 0.6% rate recorded in the first quarter.
The growth rate is expected to have slowed in the current quarter, but in a speech on Thursday Federal Reserve head Janet Yellen said economic growth appeared "solid" and the US remained "on track" for an interest rate rise this year.
The central bank head said as long as inflation was stable and the US economy was strong enough to boost jobs, the conditions would be right for a rise.
US interest rates have been held at near-zero since the 2008 financial crisis. When they finally do rise, it will be the first interest rate increase in nine years.
Jim Baird, chief investment officer for Plante Moran Financial Advisors, said: "Overall, the outlook on the US economy for the remainder of the year remains fairly optimistic, supported by continuing job creation, increasing consumer spending, improvements in the housing sector, and solid manufacturing numbers."
Stocks on Wall Street made a bright start in the wake of the GDP figures and Ms Yellen's comments, with the Dow Jones rising 1% in morning trade.
More wealthy Americans now say they're reducing debt than at any time in the past decade, and the Federal Reserve may be to thank.
About 15 percent of high-income households, those in the top third of the earnings ladder, reported debt declined in September, more than any other time since 2005, according to Friday's consumer-sentiment report from the University of Michigan. The share was only one percentage point lower a 35-year peak reached in April 2000. Those same households reported making further progress on their finances, while the bottom two-thirds of the income distribution said their balance sheets worsened.
"The prospects of rising interest rates didn't cause high-income families to borrow in advance of those hikes—it caused them to pay down their debt," Richard Curtin, director of the Michigan Survey of Consumers, said on a Bloomberg conference call after the report. "It could be that the dodging of the hike this month meant more consumers actually looked at their finances more critically.''
Fed policy makers delayed raising the benchmark interest rate at their meeting this month as market turmoil and international-growth concerns threaten to derail the U.S. economy and slow inflation even further. Still, Fed Chair Janet Yellen said Thursday that she and others on the Federal Open Market Committee are ready to raise interest rates this year.
A late-month confidence boost among wealthier Americans in September kept the broader sentiment gauge from falling as much as forecast. Michigan's final reading for the month showed its confidence gauge decreased to 87.2, the lowest level since October, from 91.9 in August. The median projection in a Bloomberg survey called for a reading of 86.5.
The US remains "on track" for an interest rate rise this year, Federal Reserve chief Janet Yellen has said.
The central bank head said as long as inflation was stable and the US economy was strong enough to boost jobs, the conditions would be right for a rise.
Despite expectations of a rise this month, the Fed held rates, in part due to fears about global economic growth.
Ms Yellen, speaking at the University of Massachusetts, said US economic prospects "generally appear solid".
Speaking a week after the Fed delayed that long-anticipated hike, she said she and other policymakers did not expect recent global economic and financial market developments to significantly affect the central bank's policy.
Much recent inflationary weakness is due to special and likely temporary factors, such as a strong dollar and low oil prices, she said.
"Most [policymakers] including myself, currently anticipate... an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter," Ms Yellen said.
US rates have been held at practically zero since December 2008 as the economy recovers from the financial meltdown.
Financial turbulence
This month, nine members of the Fed's key policymaking committee voted to hold the federal funds rate target at 0 to 0.25%.
One committee member, Jeffrey Lacker, favoured a 0.25 percentage point rise.
The Fed's long-term policy is to keep interest rates low until employment levels improve further and the main US inflation rate approaches its 2% target.
In her speech on Thursday, Mrs Yellen cautioned that inflation may rise more slowly or rapidly than anticipated. "Should such a development occur, we would need to adjust the stance of policy in response," she said.
The bank said it is possible that there would be sufficient disruption to capital flows into developing countries to harm economic growth and financial stability.
Meanwhile, towards the end of her speech, Mrs Yellen, 69, paused twice for several seconds, appearing to have lost her place in the text.
Reuters reported that the chairman of the university's economics department, Michael Ash, appeared at her side, asking: "You ok?" and offering to escort her off the stage.
The Fed said in a statement later that she "felt dehydrated at the end of the [hour] long speech under bright lights".
The statement said she was seen by emergency medical personnel and "felt fine afterward and has continued her schedule Thursday evening".
Analysts had expected August's borrowing figure to fall to about £9bn.
However, borrowing in the first five months of the financial year was £38.4bn, which is £4.4bn below the level at the same point last year.
Total debt was £1,506bn at the end of August - up £68.9bn on a year earlier.
The ONS blamed the rise in borrowing during August on a fall in income tax paid during the month, with fewer of the payments that were due in July being paid late than in previous years.
The corporation tax take in August was also down on the previous year.
But the ONS stressed that the monthly figures are volatile and that the figures for the financial year so far may provide a better picture.
'More to do'
A Treasury spokesperson said: "Britain's hard work is paying off with cumulative borrowing £4.4bn lower than at this point last year."
"We have more than halved the deficit but there's more to do with debt remaining higher than 80% of GDP."
But Vicky Redwood from Capital Economics said the figures "bring the recent run of good news for the chancellor to an abrupt end".
"The public sector net borrowing total of £12.1bn was significantly higher than the consensus forecast of £9.2bn."
The Office for Budget Responsibility (OBR) forecast in July that the government would borrow £69.5bn in the current financial year, down from £89.2bn in the previous year.
"The government appears to be making slow progress in reducing the budget deficit," said Ross Campbell from the Institute of Chartered Accountants in England and Wales.
"Sorting our public finances depends on robust tax receipts, so it is disappointing to see corporation and income tax revenues decrease."
"The Spending Review in November is looking at expenditure, but it must also take into account what income can be recouped, or we risk turning deficit reduction into a three parliament problem."
Federal Reserve Chair Janet Yellen holds a news conference following the Federal Open Market Committee meeting in Washington September 17, 2015.
REUTERS/JONATHAN ERNST
As the U.S. Federal Reserve's chief communicator, Chair Janet Yellen is under building pressure among her colleagues and global investors to clarify where the world's biggest central bank is heading and how it is making its decisions.
The calls have come from both her policy opponents like St. Louis Fed President James Bullard and more centrist sympathizers like Atlanta Fed President Dennis Lockhart, as well as market analysts and investors who say they have been confused about the Fed's direction.
It is perhaps her biggest test yet as she tries to guide a committee currently divided between those who feel the U.S. economy has healed enough for a rate hike, and those who feel a weak global economy could undermine the country's growth and recovery.
Aside from last week's press conference, Yellen has been largely absent from the public stage in recent weeks -- focusing attention on a Thursday speech that could give insight into her place in that debate.
In the interim, analysts and investors insist the Fed has let seeming contradictions take hold -- saying that markets should not influence monetary policy, but then reacting to markets; declaring policy is data dependent and then saying that a 5.1 percent unemployment rate still needs to fall further.
"This will be a test and maybe the largest one she's faced yet," after an initial period of relative harmony at the U.S. central bank, said David Stockton, the Fed's former research director.
The stakes are global. A mistimed move by the Fed could see the U.S. raising rates as the world economy slows, triggering a further global slowdown as investors readjust to the Fed's move and perhaps pull capital from emerging markets.
While careful not to personally criticize Yellen, who in 18 months as chair has put a premium on consensus and soliciting a wide set of views about the economy, there appears broad agreement that the Fed in recent months has added to the market instability that last week prompted a delay to a rate hike.
"I don't think we are stuck in an adverse loop with markets," Lockhart said on Monday. But "uncertainty about the (Federal Open Market Committee's) policy intentions probably added to the overall environment of uncertainty that precipitated the volatility in mid-August...I am in the camp that would like to see the committee continue to refine its communications approach, particularly in this period."
SOME DATA IS MORE EQUAL THAN OTHERS
Though the Fed says it is data dependent, it is not clear that each member views the same data with the same priority, or puts the same weight on the Fed's twin employment and inflation goals. That could be fixed, Lockhart said, if the central bank developed a consensus "reaction function" to outline the conditions or triggers for a rate hike.
Bullard went a step further in an unusual televised appeal Monday asking former U.S. Treasury Secretary Lawrence Summers and others to effectively stop making public arguments against a rate hike, and muddling the Fed's discourse.
The confusion, coupled with Yellen's cautious tone at a press conference last week, has left investors discounting a rate hike until next year - despite Fed forecasts that show 13 of the Fed's 17 policymakers expect to raise rates this year.
Yellen, scheduled to speak on Thursday in Amherst, Massachusetts, may need to reclaim the message.
"I would think she will try to clarify things, one way or the other, because I cannot possibly think they are unaware of the problem that they have," said Roberto Perli, a former Fed official who is now partner at Cornerstone Macro.
On Thursday, the Fed cited risks from China and elsewhere and downward pressure on U.S. inflation from a strong dollar and weak commodities as reasons to hold off raising rates for the first time in nearly a decade.
While the decision had near-unanimous backing, a handful of hawkish policymakers like Bullard did not have a formal vote on the FOMC, and comments over the weekend suggested a close call.
Underscoring the sometimes fractious structure of the U.S. central bank, seven of the 13 officials who recommend a tightening this year only want one rate hike, while six want two or more hikes, according to the forecasts.
Chancellor George Osborne has announced that the UK will guarantee a £2bn deal under which China will invest in the Hinkley Point nuclear power station.
Image copyrightEDF Energy
Image captionEDF wants to build a new nuclear power station at Hinkley Point
Mr Osborne, who is in China, said the deal would pave the way for a final investment decision on the delayed project by French energy company EDF.
He said it would also enable greater collaboration between Britain and China on the construction of nuclear plants.
EDF welcomed the news but did not say if it put the project back on track.
Earlier this month, EDF admitted the Hinkley project in Somerset, which was intended to allow the plant to generate power by 2023, would be delayed.
In February, the French firm announced that it had pushed back its decision on whether to invest in the plant.
The £24.5bn power station would be Britain's first new nuclear power plant for 20 years and is expected to provide power for about 60 years.
Speaking in Beijing at a joint press conference with China's Vice Premier Ma Kai, Mr Osborne said: "We want the UK to be China's best partner in the West. [This guarantee] paves the way for Chinese investment in UK nuclear [to help provide] secure, reliable, low carbon electricity for decades to come."
He also announced a new £50m joint research centre for nuclear energy.
Image copyrightEDF Energy
Analysis
By Robert Peston, BBC economics editor
What is most striking about George Osborne's Chinese tour is he is doubling his political and economic bet on the world's number two economy at a time when that economy is looking its most fragile for 30 years.
Today's manifestation of the China bet is confirmation of a long-trailed loan guarantee - initially worth £2bn but likely to rise substantially - to bind in Chinese and French nuclear giants to their promised massive £24.5bn investment in the Hinckley Point C new nuclear plant.
This is certainly long-term strategic planning for more power security by Osborne and the government (well they would say). With oil fluctuating at between $40 and $50 a barrel, Hinckley's prospective electricity looks scarily expensive.
And there is a paradox about how pricey the nuclear megawatts look right now - because one of the big causes of the oil price collapse is the Chinese slowdown that has savaged demand for energy.
Mr Osborne said Chinese companies would receive a substantial stake in the project, with the UK government acting as guarantor for the investment.
The guarantee will be provided by the government's Infrastructure UK Scheme, which provides finance for projects that have had difficulties raising money from private investors.
Energy Secretary Amber Rudd told the BBC that nuclear power played in important part in Britain's energy security.
"We want low-carbon electricity and if we're going to hit our ambitious [emissions reduction] targets then we have to have nuclear," she added.
EDF has struggled to find co-investors for Hinkley, which the government has said will provide up to 7% of Britain's electricity needs from 2023.
EDF, which will continue to control the venture, has agreed to provide electricity from Hinkley at a guaranteed minimum price of £89.50 per MW hour for 35 years.
Ms Rudd rejected criticisms that this was too expensive, saying nuclear power was "reasonably priced" compared with other low carbon sources of power.
She said China was expected to lead the construction of a Beijing-designed nuclear station at Bradwell in Essex.
'Rip-off'
Vincent de Rivaz, chief executive of EDF Energy, said the chancellor's announcement was "further progress towards a final investment decision" on the plant.
He said: "The chancellor's approval of the infrastructure guarantee is a clear sign of the government's commitment to Hinkley Point C. The government's determination to bring about a renewal of infrastructure and to attract inward investment to the UK are demonstrated by this good news.
But Greenpeace's chief scientist Dr Doug Parr described the £2bn guarantee from George Osborne as "signing up the country for the ultimate rip-off deal".
He added: "Instead of locking two generations of UK consumers into paying billions to foreign state-owned firms, Osborne should invest in the flexible, smart, and truly clean energy system that can power a 21st Century Britain without leaving a pile of radioactive waste as legacy."
Other critics have raised concerns about the design of the new reactor, which will use new so-called EPR technology. Similar reactors being built in France and Finland are both late and way over budget.
The union Unite welcomed the government's commitment to non-carbon nuclear power, but it said it should not allow China to build a plant in the UK, describing its nuclear technology as "unproven".
A trader works underneath a television screen showing Federal Reserve Chair Janet Yellen announcing that the Federal Reserve will leave interest rates unchanged on the floor of the New York Stock Exchange in New York September 17, 2015.
REUTERS/LUCAS JACKSON
The Federal Reserve held interest rates near zero on Thursday, raising questions over how it will ever manage to lift them off the floor and how effectively it will communicate plans to do so.
Only just over half economists polled have predicted such an outcome, a rare occurrence, and a sign of just how hard it has become to read the Fed these days.
Prior to the rate decision, Fed Chair Janet Yellen had not spoken in almost two months. Two of her closest allies had spoken late last month but delivered seemingly contradictory messages just days apart.
After the decision, Yellen said while it was an "unfortunate state of affairs" that every comment by a Fed official is parsed for hints about the Fed's next move, "uncertainty in financial markets" is natural when a policy shift is near, as it is today.
Policymakers do not, she said, try to make up their minds on a daily basis based on the economic release of the moment, but use their regular meetings to take stock of the accumulated information and make a decision from there.
"We do our darndest to pull together the best analysis we can," Yellen told a news conference.
The issue appears to be how Yellen manages the rate setting body. Like her predecessor Ben Bernanke she listens to others before speaking at the open markets committee and she appears to value forming consensus, shown by the fact that there was just one dissent in Thursday's vote.
The language used by the Fed is aimed at giving it a high degree of flexibility when it comes to rate decisions.
That may now be a weakness when it comes to communicating where the Fed is in situations in which it might need to pivot in response to developments such as the recent market turmoil in China and beyond, possibly leading to continued volatility in financial markets.
For months the Fed has said it will only raise rates once it is "reasonably confident" that inflation will rise back to its 2-percent target. At the same time, it has said it "expects" it will rise toward that rate, despite continued misses, and without spelling out what more information would be needed.
"I think the Fed has muffed the communication going into this meeting," said Lou Brien, analyst for Chicago trading firm DRW Holdings. "They could have offered more clarity."
Markets were pricing in a one-in-four chance of a 25 basis point rate rise ahead of Thursday's meeting, according to the CME Fedwatch tool.
TOWER OF BABEL
The mixed messages in recent months mark a departure from Yellen's pledge in an April 2013 speech to end the days of "never explain, never excuse", when she said the Fed would "reap the benefits of clearly explaining its actions to the public".
Yellen earlier this year became a convert to so-called data-dependent policy-making. The idea was that the Fed would say what the economic data should look like before it tightens policy allowing the public to try to figure out if incoming data met that bar.
In August, the New York Fed president William Dudley suggested that turmoil in global financial markets meant the chances of a September rate hike were receding. Just days later Fed Vice President Stanley Fischer left the door to a rate rise open.
That made the Fed look like a "Tower of Babel," said Wells Fargo economist John Silvia.
Still, not all investors were thrown by the Fed's lack of clarity. In their view, Fed policy-setters simply cannot make the kind of guarantees on rates that they used during the depths of the recession.
And with data - and global financial turmoil - pushing the Fed is different directions, Yellen may have made the right choice in staying silent, rather than risk appearing to be overly swayed by one economic data or another.
"The best you can hope for is guidance around progress being made toward their objectives," said Craig Bishop, lead strategist for the U.S. fixed income group at RBC Wealth Management, which has $275 billion under management.
The great European revolt against austerity is already withering.
Nine months after Alexis Tsipras and his Syriza party surged to power in Greece promising to overturn Europe’s economic order, the radicals look a shadow of their former selves. Across the continent, voters alarmed by the prospect of chaos are returning to the devil they know. Greece’s election this weekend is too close to call and ballots in Portugal and Spain in coming months are unlikely to challenge the German-led budget-cutting regime.
“This is basically what politics is all about: a showdown of expectations versus harsh reality,” said Thomas Gerakis, head of the Athens-based Marc polling company. “The electorate is more mature, more wise, after being exposed to many serious events in a very short period of time.”
Rather than being the year the political landscape changed, 2015 is being defined by the failure of insurgents to move the needle of power. The European establishment has closed ranks, while the European Central Bank pumps billions of euros into bond markets in an attempt to get the economy moving, boosting incumbents across the euro area in the process.
Playing Safe
Spanish Prime Minister Mariano Rajoy, whose cuts spawned anti-austerity party Podemos, will seek a new term after economic growth accelerated to the fastest in seven years.
Outside the single currency, the old guard is also prevailing.
Though Syriza, or the Coalition of the Radical Left, are likely to make it back into government, the radicalism has been neutered.
Photographer: Konstantinos Tsakalidis/Bloomberg
In May’s election in Britain, David Cameron’s Conservatives won a surprise victory to set up a second term of budget cuts. The opposition was dismissed as a danger to jobs and economic growth and voters agreed. The anti-austerity campaign has been left to the nationalists in Scotland and a new leader of the Labour party, Jeremy Corbyn, who was an outside shot at getting the job and who some betting firms are giving less than 18 months.
“People are drawn to what is safest,” said Marta Cillero, 23, a student in Madrid and supporter of Spain’s Podemos, which surged in the polls before losing ground in recent months to the two biggest parties. “You can’t be naïve. You need to understand that it’s all politics.”
Neutered Radicals
The claim of Greece’s Syriza, Spain’s Podemos and their allies to be standing up for society’s most vulnerable rather than investors ultimately wasn’t anchored with the kind of economics that was compatible with a Europe still struggling to recover from a grueling financial crisis.
Recent history showed others who threatened to break from the dogma established by Germany quickly fell into line, regardless of warnings from Nobel Prize-winning economists Paul Krugman and Joseph Stiglitz that austerity spelled unnecessary economic disaster for Europe.
French President Francois Hollande, a socialist elected in 2012 promising to impose a new tax on millionaires and end the grip of austerity, is now focused on trimming the budget deficit and increasing competitiveness.
Though Syriza, or the Coalition of the Radical Left, are likely to make it back into government, the radicalism has been neutered.
Third Vote
Polls show the lead over the New Democracy party that lost power in January has all but closed after Tsipras ended up ditching Syriza’s more hardcore faction following six months of brinkmanship with the euro region over a new financial lifeline.
“The negotiations to reach an agreement with creditors were very tough,” said Vangelis Apostolou, a Syriza member of parliament running again this weekend. “In the end we had to make a shift toward maturity and realism.”
The claim of Greece’s Syriza to be standing up for society’s most vulnerable ultimately wasn’t anchored with the kind of economics that was compatible with a Europe
Konstantinos Tsakalidis/Bloomberg
The election on Sept. 20 will be the third time Greeks have voted this year, and comes after a referendum on July 5 in which Tsipras’s opposition to bailout conditions was overwhelmingly endorsed. Despite the result of that ballot, Tsipras then capitulated to creditors’ demands to keep his country in the euro and ensure aid flowed to an economy that still has the continent’s highest debt burden and controls on bank withdrawals.
As a taste of financial meltdown became enough to alter direction in Greece, establishment parties elsewhere watched the battle play out and let voters draw their own conclusions about the risks of a leap into the unknown.
Catalonia, Portugal
In Catalonia, radicalism engendered by the financial crisis in Spain took the form of separatism.
President Artur Mas is heading for an inconclusive election on Sept. 27 with the latest polls suggesting that pro-independence parties might win most of the seats in the Catalan assembly without a majority of the votes. Mas indicated that such a result would weaken the legitimacy of his push to break away from Spain.
A week later, the Portuguese election on Oct. 4 is a two-horse race between the parties who have traded power since the early 1980s. The prime minister who implemented austerity to meet a 2011 bailout agreement might win a second term.
Polls suggest Spain will end up in a similar position when it holds a national election by the end of the year.
Podemos saw its ratings peak at 28 percent in a poll for El Pais in January as leader Pablo Iglesias stood shoulder-to-shoulder with Tsipras during the year’s first Greek election campaign. The party, only founded last year, said its plans to tear up the political and economic playbook still stand as unemployment, like in Greece, remains above 20 percent.
The largest parties “are on the defensive even as they claim that support for the two-party system has stabilized,” said Jorge Moruno, who belongs to Podemos’s nationwide council and is a long-term adviser to Iglesias. “A lot of the economic recovery is just a perception.”
