World's Most Competitive Economies: U.S. DROPS In WEF's Ranking (PHOTOS)

BEIJING (AP) -- The U.S. has slipped down the ranks of competitive economies, falling behind Sweden and Singapore due to huge deficits and pessimism about government, a global economic group said Thursday.

(SCROLL DOWN FOR A LIST OF THE WORLD'S MOST COMPETITIVE ECONOMIES.)

Switzerland retained the top spot for the second year in the annual ranking by the Geneva-based World Economic Forum. It combines economic data and a survey of more than 13,500 business executives.

Sweden moved up to second place while Singapore stayed at No. 3. The United States was in second place last year after falling from No. 1 in 2008.

The WEF praised the United States for its innovative companies, excellent universities and flexible labor market. But it also cited huge deficits, rising government debt and declining public faith in politicians and corporate ethics.

"There has been a weakening of the United States' public and private institutions, as well as lingering concerns about the state of its financial markets," the group said.

Mapping a clear strategy for exiting the huge U.S. stimulus "will be an important step in reinforcing the country's competitiveness," it said.

The report was released in Beijing ahead of a WEF-organized gathering of global business executives next week in neighboring Tianjin. The group is best known for its annual Davos meeting of corporate leaders.

The report ranks 139 countries by assessing business efficiency, innovation, financial markets, health, education, institutions, infrastructure and other factors.

Check out the World Economic Forum's Global Competitiveness ranking -- or download the full report here.