India better equipped to overcome the slump than China, US: study

India is better placed to tide over the current economic crisis than some of the bigger economies, including the United States and China, according to a study

India has been ranked at the 13th position among 57 countries by Switzerland-based International Institute for Management Development (IMD) in terms of its ability to tide over the current slump and emerge more competitive.

The rankings, based on 'stress test', also takes into account the future scenario along with individual nations' readiness and resilience in a period of global recession.

Denmark takes first place in the ''stress test'' rankings - an analysis of which countries are better equipped to fare through the financial crisis and improve their competitiveness in the near future.

''The test is future oriented – it focuses on exposure, readiness and resilience in a period of world recession,'' IMD said in its release.

Despite weak economic forecasts, Denmark finishes first in part because of the strong resilience of its business and government and the long-established stability of its society, the report said.

Other smaller countries (less than 30 million inhabitants) from Northern Europe and Southeast Asia also fare well, it said.

''Smaller economies are often more fit to adapt and rebound in difficult times,'' said Professor Stéphane Garelli, Director of the IMD World Competitiveness Center. ''Another explanation is that several of these nations have already undergone quite severe financial and real estate crises in the not so distant past and may have been more cautious in their policies. Qatar and Chile also display advantages to confront the crisis.''

Despite finishing first in the overall 2009 World Competitiveness rankings, the US comes in 28th position in the `stress test', underlining the concern of the market with the depth of the crisis and the time that it will take to solve it.

Between the 18th and 30th positions in the `stress test' are the larger exporting nations led by China (18th), and followed by Taiwan (21st), Brazil (22nd), Germany (24th), Japan (26th) and Korea (29th).

Ireland (25th) could have been higher in terms of resilience but the suddenness and the magnitude of the real estate and the financial crisis have probably taken the country aback.

The UK (34th) is in a disquieting position; just as is France (44th), Italy (47th) and Spain (50th), stressing how much the recovery in these countries may be hampered by structural rigidities.

Russia, at 51st position, may not have had enough years of economic growth to consolidate the structure of its economy and to create the necessary buffer to cope with a crisis of this magnitude.

''In short, the Stress Test shows that smaller nations, which are export-oriented, resilient and with stable socio-political environments are better equipped to benefit immediately from the recovery,'' concluded Professor Garelli. ''However, only the good performance of the very large exporters such as the US, Germany, China or Japan will send a credible message to the world that the worst is over – a change that everybody will be able to believe in,'' he added.

The `stress test' uses a selection of 20 criteria, which are forecast and future-oriented. The World Competitiveness ranking is based on 329 criteria, 2/3rd of which are hard data and 1/3rd opinion survey. It also takes into account the ''established'' history of competitiveness of nations accumulated over the years (like infrastructure, technology, etc.)

(See: Overall Ranking: Stress Test on Competitiveness 2009)