Singapore, Canada, Denmark, the United States of America and Switzerland are the top five countries with the best business environments in the world, according to the latest business environment rankings report for the second quarter of 2023.
The report by the Economist Intelligence Unit (EIU) measures the attractiveness of the business environment in 82 countries on a quarterly basis, using a standard analytical framework with 91 indicators.
The rest of the countries in the top 10 list are Sweden, Hong Kong, Germany, New Zealand and Finland.
“Our ranking for Q2 shows that North America and Western Europe continue to be the best places in the world to do business. Asia ranks third, ahead of Eastern Europe, while Latin America marginally outperforms the Middle East and Africa (MEA),” it said.
It said the fact that 10 of the top 20 countries in the global ranking are in Western Europe reflects the region’s political stability, large and competitive domestic markets, and openness to world trade.
“Many west European countries were able to roll out significant fiscal support for citizens and businesses during 2022 as rising inflation raised the cost of living. The short-term economic outlook for the region is subdued, given rapid monetary tightening,” it said.
The EIU report revealed that Asian countries such as Vietnam, Thailand and India improved their ranking the most over the past year (Q2 2022-Q2 2023) making them the biggest winners.
Vietnam is our overall biggest mover worldwide, climbing 12 spots in the rankings, while Thailand improved by ten places and India by six, according to EIU.
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“Vietnam and Thailand, which have favourable policies for foreign investors, are benefiting from firms pursuing a China plus one policy of having supply chains in both China and another Asian market,” the report said.
“This reflects China’s zero-COVID policies, which have constrained business operations, and also allowed firms to mitigate geopolitical risk associated with the US-China relationship.”
It added that Vietnam’s score rose on the back of an improving economic outlook, and Thailand’s as a result of greater economic stability.
“Policy reforms are making it easier to do business in India, and we expect major improvements in areas such as infrastructure, taxation, trade regulation and boosting investment,” the report said.
China was the biggest loser falling by 11 spots in the second-quarter rankings compared with a year earlier.
“Although the end of the zero-covid policy is positive for firms operating in China, regulatory changes stemming from the statist direction of economic policy as well as rising local costs weigh on its business environment and limit opportunities for international investors.”
The report highlighted that the MEA region recorded the lowest score in the ranking .
“The ranking for the MEA region continues to be weighed down by poor governance and endemic insecurity, including the spillover from the conflicts in Syria, Yemen and Libya, alongside political unrest in a number of countries, including Iraq and Lebanon,” it said.
It added that both the Middle East and Africa typically suffered from weak corporate governance and regulation, as well as poorly trained labour forces and, in countries such as Angola, Nigeria and the Gulf states, an overreliance on hydrocarbons.
“Nonetheless, rates of return can be high for firms that master the region’s complicated political and regulatory climate,” the EIU report said.
