U.S. economy still world's most competitive: IMD

GENEVA (Reuters) - The United States remains the world's most competitive economy, though it is possible it will slip into recession, Switzerland's IMD business school said in a report released on Thursday.

The International Institute for Management Development, in Lausanne, ranked the U.S. economy first for the 15th year in a row in its World Competitiveness Yearbook 2008.

Singapore, Hong Kong, Switzerland and Luxembourg followed behind on the measure of countries' economic performance, government efficiency, business efficiency and infrastructure.

Australia moved up five places to seventh spot, just behind Denmark, and Canada, the Netherlands, Norway, Ireland and Taiwan all also gained in the ranking.

Both emerging economic giants China and India slipped two places in 2008, to 17th place and 29th place respectively on the list of 55 economies, published every year since 1989 on the basis of statistics and survey data.

IMD professor Stephane Garelli said that while the U.S. Federal Reserve and Treasury Department have stepped in quickly to inject liquidity into the troubled economy and its financial markets, more may be needed to avert a bigger crisis.

"A recession in the U.S. is a strong possibility," Garelli said, noting the large size of the country's financial sector as well as high commodities and food prices that could keep driving up inflation at a time of low official interest rates.

"2008 will be rough," the professor added.

(Reporting by Laura MacInnis; Editing by Jonathan Lynn)