The UAE moved up three places to seventh position in the annual IMD World Competitiveness Ranking this year, as the Arab world’s second-largest economy continues to grow amid its diversification efforts.

The country was rated highly for its business-friendly environment, the dynamism of its economy, reliable infrastructure and its competitive tax regime, the IMD survey released on Tuesday found.

Globally, the Emirates took second spot in terms of economic performance, behind the US, and fourth place for government efficiency and 10th for business efficiency.

It was ranked among the top 10 globally in more than 90 key sub-indicators, topping segments such as industrial disputes, labor force, employment and household consumption expenditure.

The UAE’s economy has been growing steadily on the back of government reforms and strong non-oil expansion.

The country’s gross domestic product is expected to expand by an annual 4 per cent in 2024, the International Monetary Fund said this year, up from its previous projection of 3.5 per cent.

Meanwhile, other GCC countries also rose on the IMD rankings, which primarily focuses on economic performance, government efficiency, business efficiency and infrastructure, covering aspects such as macroeconomic stability, fiscal policy, institutional quality, and market openness.

Qatar climbed from 12th to 11th place, Saudi Arabia advanced from 17th to 16th and Bahrain moved up four spots to secure the 21st position.

Globally, Singapore reclaimed the top spot after a gap of three years. Switzerland secured second place, while Denmark ranked third among the 67 global economies evaluated.

“We believe the most competitive economies of the future will be those able to anticipate and adapt to this changing global context while simultaneously creating value and well-being for their people. And that will also make them sustainable,” said Arturo Bris, director of the IMD World Competitiveness Centre.

He added that the main competitiveness challenges for the world’s economies in 2024 and beyond are transitioning to a low-carbon and circular economy, integrating emerging markets into the global economy, and keeping up with digital transformation.

The report said the three most influential trends having an impact on businesses in 2024 are the adoption of artificial intelligence, the risk of a global economic slowdown, and geopolitical conflicts.

“One of the key challenges for companies today is how to implement AI systems that improve efficiency without causing disruption to business activities,” the report said.

“AI related challenge is ensuring their chosen AI system’s accuracy, because inaccurate systems lead to inefficiencies and reduced productivity.”

The report said that 27 per cent of the executives surveyed consider the shift to zero emissions a crucial short-term trend, but only 12.2 per cent regard the impact of global warming as relevant.

“Executives need to balance short-term priorities with long-term ones. Environmental risks are seen as being in the latter category and are being given too little relevance despite the fact they are affecting us already,” the report said.

China, the world’s second-largest economy, advanced seven places to 14th, while India inched up a spot to occupy 39th position.

These countries offer new opportunities and markets for businesses and consumers, but also pose new risks and uncertainties, the report said.

TOP 10 MOST COMPETITIVE COUNTRIES:

1. Singapore

2. Switzerland

3. Denmark

4. Ireland

5. Hong Kong

6. Sweden

7. UAE

8. Taiwan

9. Netherlands

10. Norway