Global Talent Update - December 2018

GlobeEurope, Middle East and Africa

The surprise presidency of Emmanuel Macron originated in a two-round election, where the politically moderate, business-savvy bureaucrat seemed a more stable option to average French citizens than the harsh rhetoric of Marine Le Pen or the leftist progressivism of Benoit Hamon. However, approximately two years after Macron assumed stewardship of France as chief executive, the broad view of the French president is largely a dim one. This is exemplified by the recent weeks dominated by the gilets jaunes ("yellow vests") protests over social and economic equality that have taken place in cities and villages all over the country, which BBC News noted drove down the value of the euro in international markets.

According to The New York Times, these civil demonstrations centre around specific grievances: high unemployment, the belief that Macron's policies are more friendly to businesses than workers, a proposed gas-tax increase and several other duties that would burden lower-income working French and the elderly. Yet they are most fervently driven by a wide-ranging sense that the French economy hasn't benefited many of its citizens for a long part of the current decade. Macron started making moves to try and assuage the frustrations of these protesters not long after the demonstrations began, including the elimination of both aforementioned tax obligations, announcements of monthly supplements for employees earning minimum wage and urgent requests to French businesses to offer year-end employee bonuses. Whether these measures will work remains to be seen.

The Dutch economy represents one of the most quietly successful business climates of the entire European Union, with Data Economy reporting that recent major investments in data centre infrastructure from Google, Cyrus One and other tech firms are likely to bring numerous job opportunities and revenue to cities throughout the Netherlands. Additionally, with the increasing possibility that the Brexit secession of the U.K. from the EU might occur without a deal between those parties, nearly 50 U.K.-based financial firms are making overtures to De Nederlansche Bank, the Netherlands' national financial institution, to investigate the possibility of moving operations within Dutch borders, according to Bloomberg.

Presently, the Netherlands economy still faces a few challenges despite its generally healthy status: New Europe reported that labour shortfalls persist throughout various industries, causing private economists' growth projections to estimate decline from 2018's projected 2.7 per cent to 1.9 per cent in 2019, and 1.7 per cent in 2020. However, Netherlands Finance Minister Wopke Hoekstra remains more optimistic, expecting 2.6 per cent economic growth in 2019.

Asia-Pacific

In November, the Cabinet Office of Japan released initial estimates for economic progress in the third quarter of 2018, finding that a 1.2 per cent annualised-rate GDP contraction occurred. However, according to MarketWatch, closer examination of official data revealed the Q3 2018 growth decline to be notably greater: 2.5 per cent at an annualised rate. Analysts realised this upon taking a deeper dive into the numbers regarding capital expenditures within private-sector enterprises, which had dropped by 2.8 per cent from Q2. Consumption among private citizens also dropped, albeit by a much less serious figure of 0.2 per cent, alongside a slight, 0.5 per cent decline in domestic demand.

Indicators such as these increase worries among Japanese political and business leaders regarding the extant and forthcoming effects of the ongoing trade dispute between the U.S. and China, a tete-a-tete in which Japan finds itself caught in the unfortunate crossfire. Mizuho Research Institute economist Kentaro Arita told MarketWatch that it would be wise to keep a close eye on these metrics and their effects on foreign investment in the country. On the brighter side, IndustryWeek reported that Japanese factory output increased significantly in Oct. 2018 - the fastest jump seen in more than three years - and this could be a sign of better things to come.

The Association of Southeast Asian Nations has fostered cooperation between countries in this fast-growing corner of Asia since 1967, with Thailand, Cambodia, Vietnam, Laos and Myanmar representing other notable members. Recently, the Bangkok Post reported an exhortation issued by Thai Industry Minister Uttama Savanayana to ASEAN states urging them to increase their activity within special economic zones, areas where all member states enjoy various trade privileges and bolster worker income for employees from all nations.

This could help Thailand counter contractions in some of its typical economic standbys, such as tourism, which dropped 0.5 per cent year-over-year in October, according to Bloomberg. The Nation also noted that the country's e-commerce market and overall internet economy have been building up steam in recent months and could be significant economic drivers in the near future.

Americas

During November, the U.S. could not quite maintain the level of job growth it experienced in the previous month, according to the latest edition of the Employment Situation Summary compiled by the Bureau of Labor Statistics. Official data from the Labor Department agency confirmed that a total of 155,000 nonfarm payroll jobs created were in November, and this represented a decline of almost 100,000 from October's heights. The latest figure was considerably below the 190,000 new jobs that economists projected to be created during November. Healthcare, manufacturing and transportation saw the most positions added, with 32,000, 27,000 and 25,000 new jobs, respectively, on these industries' payrolls.

Other signs of economic inconsistency included a variety of projections from regional Federal Reserve offices that were all over the map in terms of their current and near-future projections. Combined with the newest BLS statistics, these indicators could spark some concern about the potential for a more wide-ranging slowdown in the American economy.

At the same time, other November metrics were more indicative of stability on the horizon for the foreseeable future: The unemployment rate held static at 3.7 per cent for the third consecutive month, and average hourly wages rose by 6 cents, which marked 3.1 per cent growth for the entirety of 2018. Additionally, the Federal Reserve is still on track to hike benchmark interest rates at its policy meeting scheduled for Dec. 18-19, which would be the fourth of this year, according to Reuters. Although the pace of rate hikes will likely slow in 2019 and 2020, an increase before 2018's end is indicative of considerable faith in the economy's overall prognosis.

President Andres Manuel Lopez Obrador was sworn in as just the fifth democratically elected chief executive in the history of Mexico at the beginning of December. The election of the left-wing populist firebrand and popular former mayor of Mexico City caused a fair amount of consternation among Mexico's economic elite, due to concerns over Obrador's desire to regulate business with a much firmer hand than previous presidents. However, the budget he submitted to Mexico's Congress for approval Dec. 15 does not appear excessively unrealistic or fiscally irresponsible to several prominent economists, according to Bloomberg.

Obrador's proposed budget, which must be approved or declined by lawmakers by Dec. 31, operates on the assumption of 2 per cent real gross domestic product growth and an exchange rate of 20 Mexican pesos to 1 American dollar. Some economic experts, like Credit Suisse Group AG managing director Alonso Cervera, speculate such projections might be somewhat ambitious. Otherwise, general consensus is that the budget's primary goals - reaching a GDP surplus of 0.8 per cent for 2018 and 1 per cent for 2019 - are feasible. In part, this stems from Obrador's commitment to spread spending for his ambitious social welfare programs over several years, which the new president's critics didn't believe he would do. These initiatives include increased spending on education, pensions for civil servants and new infrastructure.

 

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