The Scandinavian country climbed three places in comparison to the last edition of the index, and produced its best performance since it placed fourth in 2012-13.
Switzerland topped this year’s edition of the index, followed by Singapore in second and the USA in third.
"It’s a nice step up from Sweden. It isn’t at the top of the different categories but it is high in all of them, especially when it comes to technological development and innovation,” WEF economist Gaëlle Marti told Swedish newspaper Svenska Dagbladet.
The WEF explained that the principal reasons for Sweden’s climb were improvements in the country’s basic factors of competitiveness, and in particular its macroeconomic environment.
Robust Swedish growth was highlighted (cited at 3.7 percent in 2016) as well as a “significant decrease in the deficit” in 2015, with Sweden improving by a significant 30 places to 22nd in the world in that regard.
A “reasonably well functioning” labour market was also a positive, as was the high employment rate and high level of women’s participation in the workforce.
There were however several factors said to let Sweden down. In an indicator looking at the effects of taxation on incentives to work, the Nordic nation placed 120th in the world, a drop of 26 places from last year. The WEF also suggested that restrictive regulations in the country could be seen as a problematic factor for doing business there, though a politician from the governing Social Democrats disagreed.
“That isn’t a new position from their side. But it is thanks to our unique Swedish model with investment in education and research that we can stay at the forefront of technological development and innovation,” enterprise minister Mikael Damberg told news agency TT.
In the same week that Swiss investment bank UBS said Sweden’s capital Stockholm has the third most over-valued property market in the world, the Global Competitiveness Index warned that continued increases in house prices have the potential to impede mobility and negatively impact labour market efficiency in the country.
More positive for tech-savvy Sweden was coming fifth in the world in the WEF report’s innovation and sophistication indicators, as well as first in the world for the ethical behaviour of its firms.
The World Competitiveness Report assesses the competitiveness of 138 economies, and claims to be the most comprehensive assessment of national competitiveness worldwide.