Europe, Middle East and Africa
The U.K. remains on pace to officially separate from the European Union in spring 2019. Although businesses in the nation remain divided in their opinions regarding the Brexit referendum, Forbes named the U.K. the best country for business in 2018. On the other hand, the latest update to the World Economic Outlook from the International Monetary Fund raised questions about the British business environment, predicting it to underperform every European country - in the EU and otherwise - except Italy, during the next two years.
The U.K. boasts genuine economic positives - for example, its unemployment rate is near record lows. However, coupled with the currency downturn that Brexit engendered after its referendum vote in July 2016, and the fear of foreign businesses leaving the country's shores, the British business climate will be undeniably complicated for the foreseeable future.
With the uncertainty facing the U.K., Germany assumed the mantle of Europe's most robust economy almost seamlessly. As such, the IMF's projections are bright for the country, with 2.5 per cent growth expected in 2018. The following year should see lower but still positive growth of 2.0 per cent.
The government of Japan once again described the country's economy with the phrase "recovering at a moderate pace" in April. According to The Japan Times, this is the fourth consecutive month in which it has expressed similar or identical sentiments regarding the Japanese economic situation. An unnamed official from the Cabinet Office, which released the statement, cited industrial output, business investment and exports as notable areas of improvement. The official also noted that tangential effects of a U.S.-China trade dispute would be significantly detrimental to Japan in any context.
Bloomberg reported that foreign investors' main concern regarding Japan are aftershocks from its scheduled sales tax increase. The last time such a measure went through, it lost the Japanese economy $86 billion in output and led to a recession.
Exports, along with tourism, have long been the bread and butter of Thailand's economy, and the World Bank's latest analysis of the nation's progress projected these and other factors to drive 4.1 per cent growth in 2018. This pace would be the quickest rate of growth seen since 2012. Beside exports, consumer confidence, imports and public consumption all rose during 2017, further fueling positive predictions for the following year.
Thailand looks to diversify into new sectors as well. According to The Business Times, the government will now offer tax incentives to commercial banks that merge, in the hopes that this will improve Thailand's chances of competing with banks in Singapore and Malaysia.
For the sixth month in a row, the U.S. unemployment rate remained at its record low of 4.1 per cent during March 2018, reflecting the continued strength of the American labor force. Job growth was not as high as that seen in previous months and restricted itself to four principal industries, but it is clear nonetheless that the U.S. economy is in good shape.
Per the latest Employment Situation Summary from the Bureau of Labor Statistics, nonfarm payroll organizations added 103,000 jobs in March, a marked comedown from February, with well over 300,000 positions created. Professional and business services added 33,000 jobs, followed closely by a tie between healthcare and manufacturing (22,000 new roles each). Mining rounded out the major sources of employment growth for the month, with the creation of 9,000 positions.
Wages, on an average hourly basis, rose 8 cents to 26.82, a reasonable gain. Any considerable uptick beyond that is unlikely, however, given how low unemployment has fallen. This likelihood also means that while the Federal Reserve will likely remain on track for scheduled interest rate increases, additional hikes beyond the expected three in 2018 seem implausible as of now. Bloomberg reported that many believe the next one will come in June 2018.
There has been division over the tariffs President Donald Trump placed on steel and aluminum imports into the U.S., with American metal producers praising them and economists uncertain of their long-term impact. The duties do not apply to Canada and Mexico, and go into effect May 1. This action could positively benefit Latin America, however, by driving Chinese investments into Central and South American businesses, according to Forbes.
Energy and raw materials for infrastructure, both of which are major exports for Mexico and other Latin American nations, were a major U.S. import that China is now likely to invest in as much as possible. Overall, Chinese businesses executed 16 mergers and/or acquisitions worth about $11.5 billion in Latin America during 2017, a record total of transactions in and of itself. If this trend were to continue and more countries around the world begin seeing Central and South America as a viable business environment, it could constitute the beginning of a broad recovery this region has long sought.