SINGAPORE has been ranked second in the first global 'stress test' performed by Swiss business school IMD, indicating it is well-placed to weather the financial crisis and improve competitiveness in the near future.

The Republic was behind Denmark, which was judged to be the best prepared to withstand economic stresses during a recession out of the 57 nations surveyed. The stress test used a selection of 20 'forecast and future-oriented' criteria from IMD's World Competitiveness Yearbook (WCY) database.

These are divided into four categories assessing attitudes towards the future of the economy in 2009, as well as the readiness of government, business and society in meeting the future head-on.

Singapore was 21st in the economic forecast/ perspectives category, but was among the top three countries in the other categories - government, business and society.

Several large European economies finished in the bottom half of the poll, for example, Britain (34th), France (44th), Italy (47th) and Spain (50th).

IMD suggested the recovery in these countries may be 'hampered by structural rigidities'. In contrast, some small countries from northern Europe and South-east Asia fared well.

'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,' said Professor Stephane Garelli, director of the IMD World Competitiveness Centre.

'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.'

On the WCY overall scoreboard, Singapore slipped one rung to third, behind the US and Hong Kong. Switzerland and Denmark rounded up the top five, in that order. Despite topping the overall WCY rankings, the US finished 28th in the stress test.

IMD said this underlines 'the concern of the market with the depth of the crisis and the time that it will take to solve it'.

The WCY ranking has been published by IMD since 1989. It measures competitiveness through four facets - economic performance, government efficiency, business efficiency and infrastructure.

This article was first published in The Straits Times.