BERN - Switzerland lost its position as the world’s most competitive economy to Singapore, slipping to third place in the ranking as high US trade tariffs and a strong Swiss franc hurt investment flows.

While Switzerland remained the highest-ranked European nation, it was also leapfrogged by Hong Kong in the 2026 IMD World Competitiveness Ranking published on June 18.

Business efficiency was key to Singapore rebounding to first place, a position it last held in 2024.

The IMD said Switzerland’s decline underscores how even the world’s strongest economies remain vulnerable to shifting capital flows and heightened geopolitical uncertainty.

The setback comes as Switzerland faces intensifying competition, with Hong Kong recently overtaking the country as the world’s largest cross-border wealth hub, according Boston Consulting Group.

“With an expensive currency obviously we see the deterioration in price ranking” and that hurts capital attraction, said Arturo Bris, director of the IMD’s World Competitiveness Center.

“And you see the biggest decline in the attraction of foreign investment, the under-performance of Switzerland has been really significant.”

Switzerland’s inward direct investment flows flipped to a negative US$60.7 billion (S$78.2 billion), putting it bottom of the IMD’s 70-country ranking for that metric. IMD said the move may reflect valuation adjustments and capital repatriation rather than a lasting structural change.

Some of those flows are volatile and reflect investments into finance and holding companies, according to Ivo Germann, who heads the Foreign Economic Affairs Directorate at the State Secretariat for Economic Affairs in Switzerland.

“Switzerland faces challenges, like many other countries, in an increasingly unstable geopolitical environment that it must address in the coming years,” Germann said.

“In the face of protectionist tend...