After the pandemic, the war in Ukraine and the rise in inflation, there is one country that has weathered the storm better than the others. And it is Denmark, which in 2022 has become the most competitive economy in the world, according to the ranking produced each year by the Swiss business school IMD.
“Denmark has it all,” explains economist Arturo Bris, the report’s coordinator. “It is a small country, which is committed to digitization, has an efficient business sector, is a member of the EU and is committed to sustainability.” It is the first time in the 34-year history of the ranking that the Danish economy has reached the top. Having a strong industrial fabric (think of Lego or its shipyards) has made Denmark better able to weather the uncertainty caused by the pandemic restrictions by not relying as much on services or tourism.
In general, small economies occupy the first ten positions on the list, with the exception of the US, which remains in tenth place. A small country is usually easier to manage despite not having economies of scale and suffering from a greater dependence on foreign energy than the most populous states.
The IMD study is based on surveys of senior international executives and the results that emerge from the main economic parameters. Based on this criterion, this year Spain is in 36th place. In the last five years the country has not changed its position much, a sign that it continues to have structural problems. This year, in addition, other weaknesses have been added as a result of the rise in inflation and the energy crisis with the Russian invasion of Ukraine.
“Right now it would be detrimental to Spain’s competitiveness if an indexation of civil servants’ pensions or salaries were carried out,” says Bris. “In effect, we are talking about fixed or stable income, something that does not occur in the private sector. So, in the end, the redistributive and social justice effect is relative, while public accounts worsen and inflationary tensions aggravate.”
When international executives are asked about the weaknesses and strengths of the Spanish system, two out of three highlight talent and the level of infrastructure as positive aspects. On the other hand, “the Government’s competence” barely achieves 1.6% of the consensus. It is something that is usually repeated every year, regardless of the political color of the executive, as if an a priori perception of bad government was installed.
The fact that in the coming months inflation is destined to last, as well as the uncertainties of the war that may continue, will cause a recomposition between the different blocs. Asia, which lost many positions this year due to the impact of the pandemic, could recover ground in the short term once the health problem is back under control, while competitiveness in Europe could be affected by the challenge (and the cost) of reducing Russia’s energy dependence and on fossil fuels in general.
