Global Talent Update - April 2019

GlobeEurope, Middle East and Africa

Much to the detriment of Prime Minister Theresa May's political capital, the Brexit deadline of 29 March came and went with the U.K. still a member of the European Union. May, unable to rally Parliament to get behind a new deal over transition terms (that would appease more portions of the British political spectrum than the existing Withdrawal Agreement), had to accept the EU's offer of a six-month extension, according to the Guardian.

Brexit's new date is 31 October 2019. Between now and then, May plans to persist in efforts to devise a new transition deal and tamper down the fierce resistance she has experienced from Labour, Conservative and Liberal Democratic ministers of Parliament, as well as the various extremist parties. If an agreement on transition terms is reached, the EU will permit the U.K. to become independent immediately, regardless of the deadline.

Interestingly, Brexit upheaval did not appear to affect the British economy in March, at least not at the checkout line: The U.K.'s Office of National Statistics announced a 1.1 per cent uptick in consumer spending for the month, in contrast with its expectation of a 0.3 per cent decline.

No matter what happens with Brexit, even if Article 50 doesn't ultimately take effect, relations between the EU and U.K. may have been unalterably damaged. Between the public vote on the referendum to leave the EU in summer 2016 and the current period of uncertainty, talks between Britain's PM and EU leaders like Council President Donald Tusk steadily deteriorated, as May transformed from a "Remain" proponent into an ardent supporter of Brexit. A separate Guardian report, detailing this diplomatic breakdown, included anecdotes of vicious infighting and a pattern of passive aggression on both sides.

Additionally, the chaos of Brexit has made the EU look better by comparison than it might otherwise appear through an objective lens. According to The Nation, the legitimate immigration issues affecting the entire EU, which drove much of the "Leave" Brexit rhetoric, have contributed to the rise of extremist political movements all over Europe, many of them distinguished by xenophobic anti-immigration platforms. If they succeed in gaining ground during the May elections to the European Parliament, there is fear among EU leaders that the single-mindedness of such groups could jeopardize the region's political and economic stability.

Asia-Pacific

March 2019 marked an alarming cornerstone for Japan: For the first time in three years, the nation's government went on record describing the overall economy as poor due to a number of seriously declining metrics, including the figures for exports and industrial production. Those problems seem to have persisted. According to Reuters, the Cabinet Office under Prime Minister Shinzo Abe announced 18 April that it would not be changing its assessment of the economy from the previous month's projections, again citing weak exports and output.

Japan is still acting according to its previously established plans to raise the nationwide sales tax to 10 per cent (from its current 8) this coming October. Finance Minister Taro Aso stated as much 19 April, as The Japan Times reported. Reuters noted that some economic experts believe the fear of a drop in consumer spending and additional harm to GDP growth might lead the Cabinet Office to cancel or at least suspend the tax hike. Consumer purchases are one of the only steadily increasing economic metrics in Japan, especially as the U.S.-China trade dispute - which has arguably damaged Japan more than most other nations - shows no immediate end in sight.

After numerous delays that left the population in a long state of uncertainty, Thailand held its first democratic elections in six years, 24 March, as planned. According to The Business Times, the proceedings themselves occurred with no notable incidents or delays, though the official outcome won't be known until 9 May. However, Veerathai Santiprabhob, governor of Thailand's central bank, said this won't interrupt the nation's expectations of 3.8 per cent GDP growth - as long as the new government is formed by June.

The present military-controlled government is laser-focused on the economy, announcing approximately $630 million in planned stimulus measures 19 April aimed at aiding low-income residents and revitalizing the sluggish tourism industry. Thai Finance Minister Apisak Tantivorawong said these plans would be ready for government approval in two weeks.

Americas

The overall picture of employment across the U.S. was much more favourable in March than February: Businesses in America added 196,000 jobs last month, according to the Bureau of Labor Statistics' Employment Situation Survey, representing a massive jump from the mere 20,000 positions recorded during February. Healthcare accounted for the majority of March's gains, adding 49,000 jobs to its payrolls. Professional services and food and drink establishments took the runner-up spots, with 34,000 and 27,000 new positions created, respectively. Only the manufacturing sector saw statistically significant decline in employment during the month, as businesses in this field lost 6,000 jobs.

Bloomberg noted that March's number could end up being a more accurate projection of America's current era of economic growth than the outsized numbers often seen during 2018 (which, not infrequently, ranged from 250,000 to 300,000 jobs added per month).

Meanwhile, the unemployment rate remained static at 3.8 per cent, and average hourly earnings grew 3.2 per cent year-over-year, the latter figure falling slightly short of expectations expressed by economists that Bloomberg surveyed. Labour force participation came in at 63 per cent for March, essentially in sync with numbers seen over that metric in the last 12 months. Also, the Federal Reserve made no concrete indication of its intentions regarding benchmark interest rates. While economic experts seem convinced that a decrease is on the horizon, this could ultimately be the right choice given the various tense trade discussions in which the U.S. (and many countries worldwide) continue to find themselves embroiled.

The economy of Mexico saw moderate-at-best growth in 2018's final quarter due to factors including a number of austerity measures designed to reduce out-of-control federal spending. However, there is renewed optimism regarding the nation's potential, according to Forbes, with economic analysts predicting gross domestic product to rise from 1.8 to 2 per cent between 2019 and 2020.

Uncertainty regarding the efficacy of President Andres Manuel Lopez Obrador's economic plans for the country has dimmed somewhat. Barclays economist Marco Oviedo stated that this diminished wariness could galvanize the resumption of various business projects, some of which have been paused for two years or more. At the same time, there will still be a number of hurdles to clear: Reuters reported that Banco de Mexico is particularly concerned with state-run oil firm Pemex, which is currently $106 billion in debt - enough that the government expects to have no choice but to bail the company out.

 

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