The tiny city-state was the only Asian economy along with Japan within the top 10 of the 125 economies surveyed worldwide by the Geneva-based think tank.

Japan was ranked seventh behind the United States, which fell to sixth place from its number one ranking last year, the WEF said.

Hong Kong was in 11th place and Taiwan was number 13, as Asia's so-called tiger economies kept their high rankings. Hong Kong improved from 14th place in 2005, while Taiwan fell from eighth place.

"Asia is home to some of the most as well as some of the least competitive economies in our rankings," said WEF chief economist Augusto Lopez-Claros.

"Singapore leads the pack, ranked fifth overall, followed by Japan in seventh place, with Hong Kong in 11th and Taiwan in 13th place, respectively.

"These economies all have high quality infrastructure, flexible and efficient markets, and healthy, well-educated work forces. They are also operating on the outer boundaries of the technology frontier, both at the firm and consumer level," he said.

The rankings were based on a survey of more than 11,000 business leaders in 125 economies worldwide and also included macroeconomic factors, innovation and use of technology, plus the quality of public institutions.

Switzerland, in fourth place last year, dethroned the United States for the number one position this year. It was followed in order by Finland, Sweden and Denmark.

Growing trade imbalances have dented US macroeconomic ratings, while the levels of efficiency and transparency in public institutions "do not match those of the most developed industrial countries," the WEF said.

Germany was number eight, the Netherlands was number nine and Britain rounded out the top 10.

Among other European states, Norway was number 12, Iceland number 13, Austria in 17th place and France at 18 place, beating Belgium which was ranked number 20.

In the Asia Pacific region, Australia was at number 19 and New Zealand at number 23.

South Korea was in 24th place, Malaysia was in 26th place, Thailand placed number 35 and Indonesia was in 50th place.

India was in 43rd place, beating fellow Asian behemoth China which was in 54th place. While India improved two notches from last year, China fell six paces.

"India's overall rank of 43 demonstrates remarkably high scores in capacity for innovation and sophistication of firm operations," Lopez-Claros said.