Europe, Middle East and Africa
With Boris Johnson installed as the newly elected British Prime Minister, replacing Theresa May, the country continues to be immersed in Brexit news and its effects on the UK economy. Most recently, however, many business groups in the country are highlighting potential economic woes should a no-deal Brexit take place. This, of course, could greatly impact the jobs outlook in the region depending on what occurs politically in the coming months.
“Business groups have admitted many companies are ill-prepared for a no-deal Brexit on October 31,” according to the Financial Times, “confirming a leaked government document that ‘EU Exit fatigue’ has set in after two delays to the UK’s departure.” The government document, dubbed “Operation Yellowhammer,” is a contingency plan for the government should there be a no-deal Brexit. But things aren’t looking rosy by any means: “The warnings included three months of chaos at ports, shortages of fuel and food, nationwide unrest and a hard border on the island of Ireland,” according to the document.
Interestingly, the government’s findings illustrate that many companies in the country have failed to properly prepare for this potential Brexit issue. However, Michael Gove, who is in charge of “no-deal preparations,” has called the document outdated. “He added that Prime Minister Boris Johnson had ramped up preparations for a no-deal Brexit and the government was better prepared for the worst-case scenario,” according to the Financial Times article.
In huge news for the oil industry elsewhere in the EMEA region, Saudi Aramco made headlines in talent news this month with word that the company remains the world’s most profitable company, according to Bloomberg. This comes despite the fact that the price of oil has been dwindling in recent months and even with the company’s profits sliding 12% to $46.9 billion in the first half of 2019, according to the news publication. “That easily outstripped corporate titans such as Apple Inc., Amazon.com Inc. and other big oil producers, many of which suffered larger declines in profit as output and crude prices fell,” according writes Bloomberg.
Along with the news of Saudi Aramco’s financials, the company also announced on August 20 that it’s set for the world’s largest Initial Public Offering, or IPO, using Lazard and Moelis to advise the process, according to another Bloomberg report. “The IPO project was first announced in 2016 as the cornerstone of the kingdom’s Vision 2030 plan to modernize the Saudi economy,” according to the article.
In the Asia-Pacific region, the intensifying protests in Hong Kong have led to even further economic issues for the region, according to recent news reports. CNBC, for example, reported on August 20 that Hong Kong’s leader Carrie Lam said the city’s economy could be bleak in the coming months as a result of the ongoing protests.
“The Hong Kong economy is facing the risk of downturn,” Lam said, according to CNBC. “We can see this from the data in the first half. Actually, I think the data in the first half has not fully reflected the seriousness of the problem.”
Notably, this lines up with recent economic data for Hong Kong, which had its 2019 GDP growth forecast lowered "to between 0% and 1%, from the original range of 2% to 3%." For instance, both the retail and real estate industries have been especially hard hit as a result of the protests.
Elsewhere in the region, the ongoing U.S.-China trade war tensions have caught the attention of Japan’s Prime Minister Shinzo Abe, according to a recent Reuters report. In fact, he called the relations between the two countries “very important” not only to Japan’s own economy but to the world’s. “I hope there will be good results from U.S.-China trade negotiations that will help stabilize the global economy,” Abe said in a press conference after a G7 summit in Biarritz, France, according to Reuters.
“We will guide economic policy with an eye on the impact (the U.S.-China trade tensions) could have on Japan’s economy,” added.
The comments from Abe come on the heels of a trade pact apparently made between the U.S. and Japan, according to The Washington Post. The article notes, “President Trump said Sunday that he had reached a trade pact ‘in principle” with Japanese leader Shinzo Abe, in an apparent effort to gin up support for a tough-talk negotiating style that he says is bearing fruit.”
As the article notes, Trump has been threatening Japan with automobile tariffs for more than a year. “We still have some remaining work that has to be done at the working level,” Abe told reporters after meeting with the U.S. president.
In the United States, talks of a recession in recent days has caused volatility in the markets and comments from U.S. President Donald Trump to declare that a payroll tax cut may be on the table, which would potentially benefit American workers. However, there’s been confusion over his comments as the president’s advisors seemed to suggest that such a tax cut was not actually being considered.
“President Donald Trump said on Tuesday he was weighing a payroll tax cut - an idea his advisers had insisted was not under consideration, given its potential to signal administration concern about a weakening economy. ‘It is something that I'm thinking about,’ he told reporters at the White House,” according to CBS News.
However, he then added that “we’re very far from a recession” in his comments to the media. The news comes as Trump has been seeking to strike a deal with China in the ongoing and intensifying trade war. Last week, for example, Trump said he was delaying $156 billion in tariffs in an effort to avoid hurting consumers during the holiday season. “He has also put off making a decision on whether to grant Chinese technology giant Huawei Technologies, which he has described as a national security risk, a 90-day extension to buy parts from its U.S. suppliers,” according to the CBS News report.