Israel slipped two places to 26th in the 2020 World Competitiveness Yearbook ranking published Tuesday, continuing a downward trend in economic performance in recent years.The annual index released by the Switzerland-based Institute for Management Development's (IMD) Business School measures the competitiveness of 63 developed countries according to their economic performance, government efficiency, business efficiency and infrastructure. The Israeli economy, which fell three spots to 24th place last year, impressed globally for its scientific infrastructure but scored particularly poorly in a comparison of prices and basic infrastructure.Israel was named by IMD as the world leader in expenditure in R&D and ICT (information and communication technology) service exports, but its overall performance was pulled down by factors including its dependency ratio (62nd place), gasoline prices (59th), investment in telecommunications (55th), renewable energies (55th), redundancy costs (54th) and immigration laws (51st).Overall, small economies led the global pack, with Singapore retaining its number one position for a second year, followed by Denmark, Switzerland, the Netherlands and Hong Kong."The benefit of small economies in the current crisis comes from their ability to fight a pandemic and from their economic competitiveness," said Prof. Arturo Bris, director of the IMD World Competitiveness Center. "In part, these may be fed by the fact that it is easy to find social consensus."The ongoing United States-China trade war significantly impacted the economic performance of the world's two largest economies, as the US fell from third place in 2019 to 10th place, just two years after securing the top spot. China dropped from 14th place to 20th in this year's rankings.During the past year, Israel was recognized for improvements in its share of hi-tech exports, exchange-rate stability, bureaucracy and labor regulations. At the same time, however, the economy witnessed a decline in long-term labor force and employment growth, as well as in primary and secondary education standards, and saw a significant increase in government debt.According to business executives surveyed by IMD, the Israeli economy is perceived as attractive by top managers due to its skilled workforce, strong R&D culture, high educational level and its dynamism. But they are also concerned about Israel's tax regime, policy instability, government competence and quality of corporate governance.The most pressing challenges faced by the Israeli economy in 2020 mostly concern recovering from the coronavirus pandemic, according to the authors of the index. These include decreasing the unemployment rate, reducing the government deficit, helping private companies to regain productivity and increasing productivity in general."The Israeli business sector faces extraordinary, historic challenges in terms of their severity," said Uriel Lynn, president of the Federation of Israeli Chambers of Commerce, which provided data for the survey."In order for Israel to maintain its competitiveness and also return to accelerated economic growth, budgetary assistance will not be sufficient," he said. "Economic leaders need to understand that they must deal with a change to the basic foundations upon which the business sector in Israel operates."