Global Talent Update -- May 2019
Europe, Middle East and Africa
Prime Minister Theresa May presented another attempt at a negotiated Brexit agreement to Parliament 21 May. Her administration claims the new prospective deal includes assurances designed to appeal to both Labour and Conservative sides of the aisle. However, the Guardian reported that those in the legislature's latter wing are already making plans to move forward without May's leadership. Some appear willing to pursue a "no-deal Brexit" that could considerably limit the U.K.'s ability to trade with European Union states after Britain separates from the EU on the new 31 Oct. deadline. According to BBC News, Brexit-related turmoil has already significantly detracted from Northern Ireland's economy, with sharp declines in business activity throughout that region.
Prominent British economic leaders have made a point of stressing how much damage a no-deal Brexit could do. Ben Broadbent, one of the Bank of England's deputy governors, said as much, according to a separate Guardian report: Bank researchers speaking with U.K. business leaders concluded that leaving the EU without a deal would, in Broadbent's words, constitute "actively choosing the very thing that businesses seem to fear the most."
After several quarters of distressed industrial production and overall poor performance, the economy of Germany could be on a genuine rebound.
Financial Times reported that the nation's GDP expanded by 0.4 per cent in 2019's first quarter, in contrast to the stalled growth and contraction that characterized much of 2018. German government and business leaders have expressed relief that fears of recession are likely unfounded, even if there is still a long way to go to full recovery.
Industrial production, long one of Germany's core economic areas, represented one of the main drivers of Q1 growth. In fact, the nation was one of the only Eurozone economies to see positive industrial output during March, according to Reuters.
Expected by many to see a contraction of about 0.2 per cent in 2019's first quarter, the GDP of Japan actually experienced annualized growth of 2.1 per cent during this period, according to Japanese Cabinet Office data cited by Reuters. Economy Minister Toshimitsu Motegi said in a statement to the media that this growth validates the economic policies of Prime Minister Shinzo Abe.
"There’s no change to our view that the fundamentals supporting domestic demand remain solid,” Motegi said.
However, the aforementioned GDP surge came in part from a trade surplus, caused by a drop in imports steeper than the Q1 decline in exports. The Associated Press reported that public and private residential investments fueled the remaining growth. Because private consumption fell alongside exports, some believe this growth isn't sustainable, especially if Abe's administration goes through with its planned sales-tax hike.
Although Thailand took an important step by holding its first real democratic elections in six years back in March 2019, the country remains fairly behind other nations in Southeast Asia in economic terms. Its annual GDP, despite rising each year from 2015 to 2018 and averaging 3.8 per cent growth, is well behind the region's 6.2 per cent average. Forbes noted that Thailand may look to attract investment from China and Japan, particularly because of its successful record of auto parts manufacturing, but global trade tensions could interfere with such plans.
On the other hand, economists surveyed by Reuters project that Thailand experienced 1.4 per cent seasonally adjusted quarterly growth in the first few months of 2019. While this figure hasn't been confirmed by Thai government statisticians, it would represent the fastest quarter-on-quarter growth seen since the beginning of 2018.
The U.S. economy saw another outstanding month for job growth in April 2019. According to that month's edition of the Employment Situation Survey compiled and issued by the Bureau of Labor Statistics, American payroll organizations added 263,000 new positions during April. This figure, massive by any standard, exceeded March's revised figure of 189,000 jobs added (down from an initial estimate of 196,000) by more than 70,000 positions. It also came in ahead of the economists' poll conducted each month by Reuters, which had predicted a gain of 185,000 jobs for April. (Bloomberg didn't report its poll's estimate, but confirmed it was well below the BLS's figure.)
Professional and business services, construction and healthcare led American industries in employment expansion during April, with the former accounting for 76,000 jobs alone. Additionally, the unemployment rate fell to 3.6 per cent, which, per The Washington Post, is a low not seen since 1969.
Wages didn't grow quite as expected during April, coming in at 0.2 per cent month-to-month and 3.2 per cent year-over-year - both exactly the same as March. Reuters also noted that some of the unemployment decline stemmed from people leaving the labor force entirely. Additionally, some analysts believe the ongoing tension over trade between the U.S. and China - which shows little signs of abating, on either side, as of mid-May - will eventually become unsustainable and boil over into more serious conflict if the trade dispute continues to collaterally damage the global economy, as The Economist noted.
The confluence of competing factors affecting the economy of Latin America ultimately make for a future that is somewhat uncertain. Three of the region's most prominent nations - Brazil, Argentina and Mexico - have all experienced gross domestic product contractions or growth slowdowns in recent quarters, according to Bloomberg. Other countries, including Chile, Peru and Colombia in particular, have gone in more positive fiscal directions, but their modest economic size by comparison to the first three nations means their effects on the overall region aren't as significant.
Compared to the powder keg of sociopolitical and economic unrest that Venezuela has become, Brazil's contraction and Argentina's near-recession conditions appear less dire. However, those two countries' economically dire straits are damaging their governments' credibility among the citizenry.
Bloomberg noted that market experts remain unsure of Brazilian President Jair Bolsonaro's ability to attract investors, while Argentine senator and former president Cristina Kirchner's pending trial on charges of political corruption makes her unappealing to two-thirds of the electorate, per The New York Times. The new Mexican president, Andres Manuel Lopez Obrador, appears to be one of the only Latin American political leaders who isn't drawing criticism for his nation's economic troubles: BBC News reported that Obrador's approval has ranged between 60 and 85 per cent during his time in office thus far. Additionally, Mexico has attracted much more significant Chinese investment than its neighbors, with four major factories slated for construction in Tijuana later this year.