A few short questions which will define Competitiveness in 2009, and beyond

by Professor Stephane Garelli

Director of IMD World Competitiveness Center

How long will the recession be?

As an indicator, the informal feedback from business leaders recently attending IMD events indicates a “wait and see” attitude until the summer. Some signs of recovery are expected during the second half of 2009 and stronger results will appear in the statistics of early 2010. As usual the stock exchanges will pick up earlier. After all, we cannot stay on a diet forever!

What type of recession?

An “ECG U type”! This means a rather long recession with some ups and downs (like a graph of an ECG of brain waves) and a few false starts during the lower part of the U and before the real upturn occurs.

Which country shall recover first?

The US, which was among the first to enter into recession, will naturally lead the recovery. Even if some regions of the world (China) experience some early growth, the one and only key and credible message that the worst is over will come from the US.

Which countries shall recover last?

Traditionally Germany, Japan and Switzerland are the last to recover. Their “structural rigidities” are higher than in most Anglo- Saxon countries and may explain why their economic cycle is usually delayed.

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Again this year, the United States is first in the rankings of the 2009 IMD World Competitiveness Yearbook, a pioneer in ranking and analyzing how nations compete and manage their path to prosperity,

But will the United States’ run continue? In 1989, Japan seemed firmly in the number one position with the US in third. By 1994, however, the US took over leadership, a position it has held ever since.

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