By ANNA TEO

Singapore has dropped one rung to third in the latest world competitiveness rankings, behind the United States and Hong Kong. But it also emerges as one of the 'fittest' and most resilient economies in a new 'stress test' of which countries are likely to fare best in the global recession.

Denmark, followed closely by Singapore, are the two deemed to be the most equipped to pull through the crisis and emerge even more competitive, according to Swiss business school IMD's new measure. Qatar, Norway, Hong Kong and Switzerland, in that order, are next in the top six.

While IMD's 20-year-old world competitiveness rankings are a fairly comprehensive analysis based on some 330 criteria, its new 'stress test' is more narrowly focused on just 20 'forecast and future-oriented' measures around economic forecasts, government, society and business issues. The idea is to provide a quick early 'glimpse into the future', says the Lausanne-based school.

'The test is future oriented - it focuses on exposure, readiness and resilience in a period of world recession.'

Despite topping, yet again, the overall 2009 World Competitiveness Yearbook rankings, the US finished 28th in the stress test, reflecting market concerns over the depth of its economic crisis and how long recovery will take, IMD notes.

The results of the stress test show that smaller economies are often more fit to adapt and rebound in difficult times, says Stephane Garelli, director of the IMD World Competitiveness Centre.

Although its economic forecasts for 2009 are still weak, Denmark emerges tops in part because of the strong resilience of its business, government and the long-established stability of its society, IMD notes.

The bigger exporting nations mostly finished between 18th and 30th in the stress test: China (18th), Brazil (22nd), Germany (24th), Japan (26th), US (28th) and Korea (29th).

The European nations are mostly much further down the list: UK (34th), France (44th), Italy (47th) and Spain (50th), reflecting concerns that recovery in these countries may be hampered by structural rigidities, IMD says.

'In short, the stress test shows that smaller nations, which are export-oriented, resilient and with stable socio-political environments are better equipped to benefit immediately from the recovery,' says Professor Garelli. 'However, only the good performance of the very large exporters such as the US, Germany, China or Japan will send a credible message to the world that the worst is over - a change that everybody will be able to believe in.'

Meanwhile, the overall world competitiveness rankings of 57 economies see second-placed Hong Kong - it swopped spots with Singapore this year - closing in on the US.

The top 10 list is largely unchanged, except for Finland leaping from 15th last year to ninth, and Luxembourg, fifth last year, dropping out at 12th.

But competitiveness is about how nations and businesses manage all their competencies for greater prosperity, not just about economic growth, and should therefore take into account 'soft factors' such as quality of life and technology.

'This helps explain why some countries, the US, Japan, the UK, Nordic economies and small, open economies like Hong Kong, Singapore and Switzerland, are able to maintain their rankings in the top league despite short-term disruptions,' IMD says. 'Too much focus on short-termism helped trigger the crisis.'

This article was first published in The Business Times.