Global Talent Update - October 2018

GlobeEurope, Middle East and Africa

After his surprising election about 18 months ago as an independent candidate with ambitious reform plans, French President Emmanuel Macron ended up facing an uphill battle of economic issues, including high unemployment and dwindling consumer confidence. However, there have been some recent indicators that suggest Macron's plans might be having a gradual - but noteworthy - positive effect. For example, Reuters reported that 66 per cent of the employment-eligible population are part of the French labour force, the highest such percentage seen since 2003. Youth unemployment, while still an objectively high 20 per cent, is also lower than it has been in a decade.

Macron has staked much of his political reputation on plans to reform the economy in a way favorable to businesses and workers alike, though critics say his policies show preference to the former. In response to such criticisms, the president announced plans to institute another round of tax cuts focused on breaks for the working class, according to The New York Times.

Not long ago, Israel was a developing economy, and in 1995, it signed a bilateral taxation and trade agreement with the U.S. that was relevant at the time, but is considerably less so now. According to Haaretz, realization of this outdated agreement spurred Israeli Finance Minister Moshe Kahlon and U.S. Secretary of the Treasury Steve Mnuchin to plan major revisions to this policy. The two nations' chief economic representatives announced this publicly Oct. 22. The policies, which impose some of the world's highest tax rates on dividends of assets from which Israel and the U.S. profit, are based on long-outdated figures.

Currently the state of Israel represents one of the strongest, most well-rounded economies within the Europe and Middle East macroeconomic region. Last week, the Jerusalem Post reported that Economy Minister Eli Cohen said Israel could greatly increase its per capita gross domestic product to be one of the highest-ranked member states of the Organisation for Economic Coordination and Development by this metric.


The Japanese export market suffered a setback in mid-October, falling 1.2 per cent year-over-year from the same time in 2017. According to MarketWatch, this occurred in part because of the ongoing trade dispute between the U.S. and China, as the latter is one of Japan's major export buyers. The decline in this metric also marked the first time exports had dropped in almost two years. While this doesn't have major long-term consequences in and of itself right now, trade tensions could prove quite damaging to Japan's exports if they continue for months on end.

Other measures of Japan's economy are more positive. The Japan Times reported growth in private investment shot up 3.1 per cent in Q2 2018, ahead of expectations, and the nation's forthcoming free trade agreement with the European Union could counter some of the issues caused by the U.S.-China dispute.

Exports play a major part in the Thai economy, so it was a surprise when official Ministry of Finance figures revealed exports dropped 5.2 per cent year-over-year from September 2017, according to Reuters. The news provider's own poll of economic experts showed a median prediction of a 6.05 per cent increase. Not unlike the situation with Japan noted above, trade disputes around the world - headlined by the economic conflict between the U.S. and China - contributed significantly to this unexpected decline, although Thai exports to America actually went up 1.2 per cent on a year-over-year basis.

Thailand's Finance Ministry remains fairly positive despite the announced decline, believing 2018's total export growth will still reach 8 per cent. If September's numbers are an anomaly, 8 per cent is entirely possible. Additionally, other Thai economic indicators are strong, such as GDP growth, which hit 4.5 per cent in 2018's first quarter for the highest such figure seen in four years.


The American economy continues to function at high levels of efficacy in terms of job growth, but September's numbers caused some slight uncertainty among some in the business world. The Department of Labor's Bureau of Labor Statistics announced Oct. 5 that nonfarm payroll businesses in America across the public and private sectors created jobs for 134,000 individuals during September in its monthly Employment Situation Summary. This was much less than August's 210,000 jobs, and leading economists generally predicted job gains in the 170,000-190,000 range for September.

However, the employment rate fell in September to reach a new low for the year: 3.7 per cent. According to The New York Times, this figure isn't merely a landmark for 2018, but is also the lowest jobless percentage on record since 1969. Additionally, the landfall of Hurricane Florence along the coasts of southern Eastern Seaboard states - most notably North Carolina - during this month meant that certain statistics appearing negative in the short term aren't necessarily indicative of any long-term downturn.

As one would likely expect, the American leisure and hospitality sector took a major hit, losing 17,000 workers. However, the major gains in other sectors like professional and business services, healthcare, transportation and construction - 54,000, 26,000, 24,000 and 23,000 new jobs, respectively - are more than enough to counter the deficit caused by the hospitality sector. Average wage growth and other indicators regarding the American labor force seem to point toward a strong economy, noted by many investors' expectations of at least one interest rate hike by the Federal Reserve before 2018's end.

The economy of Latin America appears poised for reasonable growth through the end of 2018 - and potentially into 2019 and beyond. Citing research jointly conducted by the UN and the Economic Development Division of the Economic Commission for Latin America, U.K.-based financial services firm TMF Group pointed out that Latin America and the Caribbean will see respectable economic growth of approximately 1.5 per cent through 2018.

Looking into the near future, it seems likely that the most successful and stable countries in Central and South America will attempt to attract foreign investment to further galvanize their economies in a sustainable manner. Nations including Argentina, Paraguay, Uruguay and Brazil may find themselves the subject of significant international interest, as they all feature different tax-related benefits. Seeking Alpha cited Peru as another nation investors may be intrigued by due to its rapidly expanding economy. Meanwhile, Chile and Mexico both elected new leaders with major public support amid stabilizing economies, and Colombia has built up its presence in new industries like IT, metal mechanics, agribusiness and the pharmaceutical industry, among others.

Brazil remains a notable trouble spot within the Americas as it attempts to rebound from its various political corruption scandals. Far-right, president-elect Jair Bolsonaro will be tasked with this effort.

Argentina is also seeing considerable devaluation of its peso. Nevertheless, Latin America overall can feasibly expect major economic progress within the next several years.


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