The study by the WEF ranks 144 countries by examining 113 indicators culled from official data sources and a poll of 15,000 executives who assess the country where they do business.
Switzerland once again tipped Singapore off the top spot thanks to high scores in areas such as labour market efficiency, innovation and effective public institutions.
The best-ranked EU countries were Finland at third place, followed by Sweden and the Netherlands at fourth and fifth place, respectively.
The lowest ranked EU country was Greece at 96th. The country came in at the bottom - 144th out of 144 - for its macroeconomic environment.
Rather than a big shake-up in the rankings, the 2012 survey found deepening divides, said Margareta Drzeniek, a senior economist at the Geneva-based organisation.
"One of the reasons those persistent divides are not being closed - and the prime example here is Europe, or the United States as well - is because of the political deadlock that we've observed, that has prevented those countries from taking a longer-term approach to improving competitiveness with a view to stabilising growth in the future," Drzeniek told Reuters.
"This political deadlock is jeopardising the future prosperity of those countries because it may lead to a reduction of productivity and a loss of competitiveness and reduced growth in the future," she added.
Qatar moved up three places to 11th but may need to reduce its vulnerability to commodity price fluctuations if it is going to break into a top 10 dominated by northern European countries, the report said.
The United States fell from fifth to seventh because of political and economic problems that detracted from its status as a global powerhouse of innovation, the study said.
Three of the four BRICS (Brazil, Russia, India and China) fell in the rankings. Only Brazil climbed up five places from last year to 48th.
China still led the group. Its 29th place ranking was down from 26th in 2011. However, the country was still 30 places ahead of India, which has lost 10 places since peaking at 49 in 2009.
Russia was 67th, down one place from 2011. The country had a sharp improvement in the macroeconomic environment offset by weak public institutions, which were ranked 11th worst.