Oct 02, Colombo: Sri Lanka has slipped fourteen notches down the index of global competitiveness this year to rank 85th among 137 countries, according to the Global Competitiveness Report 2017/2018 released by the Geneva-based World Economic Forum (WEF) last week.
Sri Lanka, with a score of 4.08 out of 7 ranked 85th in the Global Competitiveness Index (GCI) this year dropping from last year's 71st place while neighboring India emerged as the top rank in South Asia at 39th place.
Sri Lanka slips in the ranking to 85th, mainly due to a deteriorating institutional environment, lower goods markets efficiency and infrastructure that is assessed as less well developed, according to the Global Competitiveness Report 2017-2018, which assesses the competitiveness landscape of 137 economies.
The report said macroeconomic stability needs to remain a priority for the government, as the country continues to cope with high levels of debt and tries to restore a sound macroeconomic environment.
It noted that the government managed to decrease the deficit and stabilize debt after the country entered assistance program by the IMF in 2016.
"Yet, the burden of interest on debt remains high and currently amounts to most of the revenue collected by government. Inflation also increased and forced the authorities to tighten monetary policy, with negative effects on credit," it said.
The Global Competitiveness Report said business confidence has been declining over the past two years.
The survey, which has been conducted annually, ranked the competitiveness of 138 countries based on 12 key indicators - the pillars of competitiveness - that collectively make up a comprehensive picture of a country's competitiveness.
The 12 pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.
Sri Lanka's rankings in the Global Competitiveness Index 2016/17 show that the macroeconomic environment (94), the labor market efficiency (131) and technological readiness (106) are the weakest indicators while ranking highest in health and primary education (43).
The most problematic factors for doing business were inefficient government bureaucracy policy, poor work ethic in national labor force, policy instability followed by restrictive labor regulations.
Switzerland retained its 1st place position again this year as a result of its continuing strong performance across the board and the United States remained second followed by Singapore. The Netherlands and Germany rounded up the top five.
South Asian nations lag behind, with only India featuring in the top half of the rankings. In South Asia, among the region's six countries covered by the GCI, only India features in the top half maintaining its rank from last year. All other countries improved in ranking except Sri Lanka.
Pakistan ranked the lowest in South Asia at 115th climbing from 122nd last year, Bangladesh improved seven notches to rank 99th, Nepal improved 10 places to rank at 88th and Bhutan ranked 82nd climbing 15 notches from last year.