Singapore has knocked the United States out of the top spot in the World Economic Forum's annual competitiveness report.

The index, published on Wednesday, takes stock of an economy's competitive landscape, measuring factors such as macroeconomic stability, infrastructure, the labor market and innovation capability.

Singapore pushed the world's largest economy down to second place this year, with the Asian city state scoring top marks for its infrastructure, health, labor market and financial system.

And while the United States lost out to Singapore overall, "it remains an innovation powerhouse," the report said.

Singapore and Vietnam put up strong performances this year partly thanks to the US-China trade war.

The report noted that the two Asian economies "appear to be benefiting from global trade tensions through trade diversion." Vietnam jumped 10 spots from last year to rank 67th out of 137 countries.

US imports from Vietnam rose by 36% in the first five months of this year, as companies have been shifting manufacturing from China to Vietnam and other Southeast Asian countries to avoid steep tariffs.

The trade war hasn't been a clean win for Singapore, which is heavily reliant on exports and counts China as its biggest trading partner.

Singapore slashed its forecast for GDP growth in August, after reporting a big drop in economic activity in the second quarter of this year. It's heading for its weakest annual growth since the 2009 global financial crisis.

Hong Kong, the Netherlands and Switzerland rounded out the top five. Hong Kong climbed four spots from last year's report, despite the political crisis taking a toll on its economy. The financial hub received high marks for its macroeconomic stability and financial system, but fell short on its capability to innovate.

Escalating trade and geopolitical tensions "are fueling uncertainty" around the world, the WEF report warned.

"This holds back investment and increases the risk of supply shocks: disruptions to global supply chains, sudden price spikes or interruptions in the availability of key resources," the report said.