28/09/2017 05:17 AST

The MENA region improves its average performance this year – suggesting that measures to diversify economies away from gas and oil are starting to bear fruit, although much needs to be done to lift the region’s overall competitiveness, the latest “Global Competitiveness Index 2017-2018 edition” report by The World Economic Forum released on Wednesday revealed.

The UAE is the leading economy in the Arab World, ranking 17out of 137 countries. While it improves its overall competitiveness score, it falls one place in our Global Competitiveness Index. The UAE has among the most efficient goods market in the world (3rd) as well as world-class infrastructure and institutions (both 5th). The country is home to a high level of sophisticated businesses (13th) and has been making improvements in recent years to its Innovation (25) and Technological Readiness (24).

Qatar (25), Saudi Arabia (30) and Bahrain (44) are the other economies in the top 50. The region’s most improved economy this year is Egypt (up 14 to 101).

Saudi Arabia (30th) slips one position, with a relatively stable overall performance. The macroeconomic environment has improved slightly after the 2015 oil price shock, but financial market efficiency (down 10,

at 57th) has deteriorated as interest rates increased in 2016 and credit growth slowed. The country has stable institutions (27th), good-quality infrastructure (29th), and the largest market in the Arab world (15th).

Saudi executives see restrictive labor regulations as their most problematic factor for doing business: the labor market is segmented among different population groups, and women remain largely excluded, the report said. Another concern is the lack of adequately educated workers. “Although tertiary enrollment is strong at 63 percent, more efforts are needed to advance the quality of education and align it with economic needs,” the report said.

However, the global financial system could be at risk to another external shock, the report said. “Our data suggest banks are less sound than they were before the crisis and in some regions are declining further, which would appear to bear up concerns in some parts of the world around consumer debt,” WEF report said.

The report further said flexibility and workers rights are not mutually exclusive. Economies that have been able to combine labor market flexibility with robust protection of workers’ rights have been more successful at achieving higher employment and lower inequality

On productivity, according to WEF data, improvements in innovation are often failing to have wider impact due to slower progress in technological readiness which enables the widespread adoption of innovation across the economy and society.

Switzerland topped the rankings for the ninth straight year, thanks to an efficient labor market, strong innovation and technological readiness, according to the WEF’s report. The US moved up one place to second, despite fears that a Donald Trump presidency could mean a more protectionist future for the world’s largest economy.

The UK has fallen down a global list of the most competitive nations and experts are warning that Brexit could see the country slip further.

The organization has previously warned that Brexit is likely to have negative effects in both the short and long term. In the short term, prior to any changes to the law, increased uncertainty will cause reducing investment, consumption, and foreign trade as consumers and investors become more cautious, the organizsation said in its 2016-17 competitiveness report.

Beyond that, the UK is likely to face the full negative impact of a lack of access to the single market. That, the WEF said, will increase the cost of trade, investment, and the movement of labour, all of which will eventually be reflected in the economy’s overall efficiency, it added.

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