The Philippines dropped four places in 2023 global competitiveness ranking to 52nd from 48th in 2022, with government efficiency factor suffering the biggest decline, amid rising inflation, public health crises, geopolitical concerns and other uncertainties.

The 2023  World Competitiveness Yearbook, which measures the competitiveness of 64 economies based on certain factors, showed that the drop in the Philippine ranking was a result of declines in three out of the four main factors or dimensions of competitiveness.

The country’s Business Efficiency factor dropped from 39th in 2022 to 40th in 2023 while its Infrastructure factor, which continues to be a perennial challenge for the Philippines, also dropped from 57th in 2022 to 58th in 2023.

Based on the report, Government Efficiency factor suffered the biggest decline, suffering a four-place drop from 48th in 2022 to 52nd in 2023. All the sub-factors under Government Efficiency saw notable declines: Public Finance (from 51st in 2022 to 55th in 2023), Tax Policy (from 13th in 2022 to 14th in 2023), Institutional Framework (from 53rd in 2022 to 56th in 2023), Business Legislation (from 52nd in 2022 to 57th in 2023), and Societal Framework (from 50th in 2022 to 53rd in 2023).

But the country also saw some improvements. For instance, the Economic Performance factor improved by 13 places from 53rd in 2022 to 40th in 2023.

The sub-factors under Economic Performance that saw improvements include Domestic Economy (from 48th in 2022 to 30th in 2023), Employment (from 19th in 2022 to 9th in 2023), and Prices (from 58th in 2022 to 39th in 2023).

Some of the challenges that the Philippines faces in 2023 include sustaining economic recovery and growth momentum amidst global downside risks, strengthening social protection and health care systems for inclusive development, addressing learning gaps to improve local education system, investing in sustainable infrastructure to reduce climate change vulnerability, and reinforcing efficient public management strategies to support fiscal responsibility.

Despite the decline in global ranking, the Philippines continued to stay at 13th place out of 14 economies for six consecutive years in the Asia-Pacific region.

Overall, the top three most competitive economies in the 2023 WCY rankings are Denmark (1st), Ireland (2nd), and Switzerland (3rd). In the Asia-Pacific region, the top three most competitive economies are Singapore (4th), Taiwan (6th), and Hong Kong (7th).

This year’s results reflect the impact of different crises such as global inflation, the COVID-19 pandemic, and the war in Ukraine according to Professor Arturo Bris, Director of the World Competitiveness Centre (WCC). Also, 64 economies were included in this year’s Yearbook. On the one hand, Russia and Ukraine were not assessed due to limited data reliability. On the other hand, Kuwait joined the list of surveyed economies for the first time and was ranked 38th out of 64 economies.

The WCY has been published by the International Institute of Management Development (IMD) since 1989. The WCY ranks economies using 255 ranked criteria spread across four Competitiveness Factors: Economic Performance, Government Efficiency, Business Efficiency, and Infrastructure. 162 of the indicators are based on hard data gathered from national sources, while the remaining are perception-based indicators derived from an Executive Opinion Survey (EOS) of mid- and upper-level managers in each country covered.

The Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness (AIM RSN PCC) has been the Philippine partner institute of the IMD in producing the Yearbook since 1997. The AIM RSN PCC assists IMD by supplying data from national sources and helping distribute the Executive Opinion Survey (EOS).