An annual report has ranked New Zealand the 21st most competitive economy out of 63 countries.

New Zealand rose two spots from last year's rankings to outperform the United Kingdom, which was weighed down by Brexit uncertainty.

This lift was not, however, enough to lift New Zealand into the top 20 countries listed on the IMD World Competitiveness Rankings.

Since the Ardern Government came into power in 2017, New Zealand has fallen from 16th place in the rankings, where it was ahead of Australia.

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Singapore leapfrogged Hong Kong and the US to take the top spot for the first time in nine years.

The US fell two spots to third as the confidence boost from tax cuts faded and high-technology exports weakened.

"In a year of high uncertainty in global markets due to rapid changes in the international political landscape as well as trade relations, the quality of institutions seem to be the unifying element for increasing prosperity," Arturo Bris, director of the IMD World Competitiveness Center that compiles the ranking, said in a statement.

Competitiveness is regarded by economists as vital for the long-term health of a country's economy as it empowers businesses to achieve sustainable growth, generate jobs and, ultimately, enhance the welfare of citizens.

Asia-Pacific economies performed particularly well, with 11 of 14 in the region either improving or maintaining their rankings.

Outside of the Singapore-Hong Kong 1-2, Indonesia rose eleven places to 32nd, the biggest gainer for the region.

Australia was up one spot in the global rankings to 18th.

A sluggish economy, government debt and a weakening business environment hurt Japan, who fell five places to 30th.

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In Europe, competitiveness was mixed with most economies on the decline or standing still. Germany fell two places to 17th, the United Kingdom fell three spots to 23rd, France dropped back three places to 31st and Portugal was the biggest decliner for the region, falling six places to 39th.

The Nordics – a traditional powerhouse for competitiveness – largely failed to gain ground. Denmark (eighth) and Norway (11th) fell two and three places respectively, while Sweden remained in ninth.

Ireland was the biggest climber for the region, moving up five places to seventh as business conditions improved alongside a strengthening economy. Data shows Ireland leads the way globally for investment incentives, the handling of public sector contracts and areas such as image, branding and talent management.

In the Middle East, Saudi Arabia achieved the biggest climb in the global rankings, moving up 13 places to 26th.

Saudi Arabia wasn't the only fossil fuel producing nation to climb the rankings. UAE rose two places to fifth while Qatar jumped four spots to 10th.

The rankings, which started in 1989, assess 63 economies on 235 indicators. The gauges include hard data such as unemployment, economic growth and government spending on health and education, as well as soft data from a survey of international business executives on topics such as social cohesion, globalisation, and corruption. The economies were judged in four categories: economic performance, infrastructure, government efficiency and business efficiency.

- With Washington Post