Global Talent Update -- March 2018
Europe, Middle East and Africa
Leaders of the European Union's 27 member nations met Feb. 22 in Berlin for a conference largely focused on the economy of the region, according to Reuters. Just before this event took place, German Chancellor Angela Merkel explained some of her intended talking points for the summit to the lower Bundestag house of the German parliament. Prominent among these was the desire for a renewed sense of European unity in the wake of England's Brexit public referendum and subsequent invocation of Article 50 to begin leaving the EU.
As the biggest economy in the post-Brexit EU, Germany would now be responsible for the lion's share of the common budget that funds various initiatives beneficial to all member states, such as defense, migration and security. Merkel, a center-leaning conservative, maintained that her country wouldn't take on undue burdens and that "solidarity [could not] be a one-way street." Nevertheless, she affirmed Germany's commitment to living up to its new responsibility: as the fulcrum upon which the EU functions.
The result of the 2016 Brexit vote took the world largely by surprise, with many reactions leaning toward the negative - particularly those in highly globalized industries. Since that time, the economic growth of the U.K. has slowed. It is more intertwined than ever with the ebb and flow of the services sector, which performs quite strongly overall, according to Business Insider. Nevertheless, the most recent assessments of the U.K. gross domestic product, issued in late January 2018 by the Office for National Statistics, showed proof positive of gradual GDP growth contraction, though not outright decline.
In 2017's fourth quarter, U.K. GDP expansion came in at 1.5 per cent on a year-over-year basis and 1.8 per cent in terms of average annual uptick. The former figure is a sharp reduction from its 2.7 per cent tally at the same time in 2016, while the latter dropped only 0.1 percentage point from its 2016 figure. Moreover, this trend stood out as the first time in seven years that the British economy failed to outperform that of the eurozone.
Keeping in line with trends seen through much of 2017, the services industry, which comprises 80 per cent of the U.K. labour force, performed highly in the fourth quarter, while construction stood out as the sector seeing the most substantial contraction.
Although the economy of Japan typically earns attention as one of the strongest and most stable in the Asia-Pacific region, recent reporting by Bloomberg identified a slowdown in quarter-by-quarter economic growth. The final three months of 2017 saw 0.5 per cent expansion at an annualized rate - a notable decline from both of the two previous quarters and their marks of more than 2 per cent, which is the most sluggish quarterly growth observed in this metric during the last two years.
At the same time, the expansion that did occur constitutes the eighth consecutive quarter in which the Japanese GDP has grown, which is the longest period of sustained growth in about 30 years. Though business leaders and investors within Japan and abroad have expressed concern regarding the slow growth and its delaying of inflation that the Bank of Japan looks to institute for easing purposes, the broader trend of continued expansion bodes well for the long term.
Additionally, CNBC reported that the Japanese labor force reaped considerable benefits over the past several years due to government initiatives that encouraged greater participation in business by Japanese women. These stipulations mandated the establishment of more diverse hiring practices, instituted better-equipped child care centers for working mothers and increased the pay offered to women on maternity leave. As a result, the rate of labor-force participation by women in Japan rose from 65 per cent to 68.1 per cent between 2013 and 2016.
For decades, Thailand lagged behind its neighboring nations in Southeast Asia in terms of economic progress, with exports and tourism standing out as its primary earnings engines. Yet the past several years showed a consistent trend of GDP growth, culminating in 2017's expansion rate of 3.9 per cent - the best such progress seen in five years. According to the Bangkok Post, Thailand's National Economic and Social Development Board projected that continued strength in the export market, resulting in 6.8 per cent growth, should fuel total 2018 GDP expansion ranging between 3.6 per cent and 4.6 per cent.
Growth in the fourth quarter 2017 did fall short of the previous three months and economists' predictions, hitting 0.5 per cent during that period, according to The Straits Times. The third quarter had seen expansion totaling 1 per cent, and surveyed economic experts expected a figure of 0.7 per cent for the final three months of the year.
The Nikkei Asian Review reported that in an effort to expand the parameters of his nation's economy, Thai Deputy Prime Minister Somkid Jatusripitak visited Japan earlier in February 2018 to attend a business forum and court investment from Japanese tech businesses. A relative lack of technology by comparison to its neighbors has long been a weakness of Thailand's economic model, so Jatusripitak's actions could represent a concerted effort on the part of government officials to catch up to other prominent nations in the developing world.
The tourism sector, which has always been a stalwart producer for the Thai economy, is predicted to stay strong through 2018 and drive overall economic growth for the year as high as 4.6 per cent.
The beginning of 2018 saw the U.S. continuing on the path of economic growth it followed for much of 2017. According to the latest Employment Situation Summary from the Bureau of Labor Statistics, the country's nonfarm payroll businesses added 200,000 jobs in January 2018. Major industries responsible for this growth included construction, food and beverage businesses, and healthcare, which saw 36,000, 31,000 and 21,000 new positions created, respectively. Meanwhile, American unemployment held steady at its record-low rate of 4.1 per cent.
These positive signs bolstered the general feeling among economists that the Federal Reserve would soon raise benchmark interest rates on federal loans, which could in turn bring further benefits to the U.S. economy. However, according to Bloomberg, the slow pace of wage gains - a 0.3 per cent increase as opposed to the 0.4 per cent uptick seen in December 2017 - creates difficulties for analysts looking to make long-term projections about American economic progress.
Many factors caused the economies of Mexico and the U.S. to be connected long before the ratification of the North American Free Trade Agreement in 1989. NAFTA simply made that bond much more comprehensive. However, discussions between American and Mexican representatives regarding negotiations of the trade treaty have again grown strained, with the White House threatening to withdraw from NAFTA due to disputes over tariffs and imports. In light of this, the Mexican government began exploring the possibility of new agreements with Brazil to obtain more of the South American nation's corn, Reuters reported.
Brazil and Mexico already do some business on the crop, but American abandonment of NAFTA would make the former a much more viable source of corn than the U.S. In fact, during the last four months of 2017, Mexican officials began placing bulk orders of Brazilian corn that ended up totaling 585,000 metric tons. Ildefonso Guajardo, Mexico's Economy Minister, referred to this and future plans for similar purchases as a viable contingency plan for a NAFTA collapse.
On a more broad scale, Mexico saw notable growth in its economy through 2017, according to the National Institute of Statistics and Geography. Gross domestic product increased 2.3 per cent in terms of average annual value and 1 per cent from the third to the fourth quarter of that year. Financial Times reported that a survey of economists projected the yearly figure correctly but underestimated the chances of quarterly growth, expecting only a 0.6 per cent uptick.