Global Talent Update - February 2017

GlobeEurope, Middle East and Africa

Recent figures show that the economic recovery in the eurozone seems to be gathering momentum and that the French economy witnessed its strongest growth in five years. In the Middle East, the United Arab Emirates recently took the top spot in the region for its economic freedom.

According to Sky News, unemployment across the 19 countries of the eurozone fell to its lowest level in seven years in December, fueled by gains in Spain and France. Recent data from Eurostat showed an annual growth rate of 1.7 per cent for the region as a whole. GDP in the eurozone was up 0.5 per cent in the final quarter of 2016, a 1 per cent increase from the previous three months.

Moreover, the annual rate of inflation was higher than anticipated, coming in just below the 2 per cent mandate target of the European Central Bank in December at 1.8 per cent, noted Sky News.

In France, economic growth advanced at the best rate since June 2011, fueled by a 19-month high in services, reported Bloomberg. There was a 0.7 increase in the Purchasing Managers' Index for manufacturing and services for January. The Index rose to 53.8 from 53.1 in the final month of 2016.

"The French private sector continued to grow at a solid rate in January," said Alex Gill, an economist at IHS Markit. "The expansion was broad-based with marked increases in output evident in both the manufacturing and service sectors, driven by firm underlying client demand. In turn, this filtered through into the [labour] market."

In the recently-released 2017 Index of Economic Freedom, the UAE improved its 2016 ranking by advancing 17 spots to No. 8 internationally, reported the Khaleej Times. The economic performance of the nation helped put it above the United Kingdom and the United States, which were ranked No. 12 and No. 17, respectively. Up against other Middle Eastern regions, the UAE ranked No. 1.

The annual Index put out by the U.S.-based Heritage Foundation noted that the UAE has a resilient banking sector and is on its way to becoming a center for regional finance.

According to Gulf News, the Index evaluates 186 countries using 12 different measures of economic freedom including size of government, regulatory measures and how open its markets are. Economies rated among some of the most economically free enjoy much higher per capita incomes, noted the source.

Growing its diverse private sector and improving investment and business over the past year, the UAE saw "broad-based and dynamic growth," according to the Khajeel Times.

Asia-Pacific

The Thai economy is expected to not only grow steadily in 2017, but also remain protected from economic turmoil happening elsewhere in the world. In Japan, though domestic demand remains low, exports are expected to continue to drive the economy in the coming months.

Following the October 2016 death of the late King Bhumibol Adulyadej in Thailand and the accompanying long period of mourning, the economy is expected to recover as consumer confidence makes a comeback, reported the Asia Sentinel. Though export growth is not forecast to be very strong, it is expected to be offset by steady domestic spending. Last year, gross domestic product grew 3.3 per cent year-on-year in the first three quarters. According to economist Nalin Chutchotitham at HSBC in Bangkok, this was helped by tourism as well as public investment and private consumption.

Looking ahead, public investment in transport infrastructure is expected to be a key component of growth.

"Sufficient transportation infrastructure is vital to putting Thailand on a higher growth trajectory," said Usara Wilaipich, senior economist for Thailand at Standard Chartered Bank in Bangkok.

A variety of construction projects totaling ฿488.3 billion will begin this year, noted the Asia Sentinel.

Also forecasting growth is the Standard Chartered Bank, which has said that Thailand will be protected from any global economic unraveling by its "resilient fundamentals," reported The Nation. Despite policies from a new U.S. presidency and unknown European politics, the bank stated that low debt, increased government investment and tourism growth, among others, will help to increase the national GDP this year.

Following an anticipated 3.5 per cent growth for 2017, that Thai economy is then forecast to expand 4.3 per cent and 5 per cent in 2018 and 2019 respectively, noted The Nation.

After a peak first quarter in 2016, Japanese economic growth continued to slow last year, reported The Japan Times. On Feb. 13, the Cabinet Office announced overall growth of 1 per cent for 2016. Without increased internal consumption, the fourth quarter was fueled by investment and increased exports.

"External demand was strong as expected, providing evidence that it drove economic growth again in the October-December quarter," said Yuichiro Nagai, an economist at Barclays Securities Japan Ltd. "We expect the effects of (the government's) extra spending measure (for fiscal 2016) will emerge and continue to support the economy over the first half of fiscal 2017."

According to The Financial Times, internal spending isn't forecast to jump any time soon. However, 2017 will likely continue to see an uptick in exports thanks to the weakened yen, which will help to push steady growth.

Americas

The first quarter of 2017 started off strong for the U.S. economy, which added 227,000 jobs in January. In Brazil, a new measure by the government is hoped to help quicken economic recovery. And a German manufacturing and electronics company has announced an expansion in Mexico that will add 1,000 jobs.

Surpassing forecasts by economists of 175,000 jobs added, labor growth in January also sailed past the 157,000 positions added in the last month of 2016, according to Forbes. Those gains marked the 76th straight month of job growth for the U.S.

In the last 12 months wages have steadily increased and hourly earnings on average have increased by 2.5 per cent in that time, noted Forbes. January was no different as earnings saw a median 3 cent increase to $26 per hour.

And according to a recent New York Times article, the U.S. economy is only just starting to gain speed. In addition to a steady job market, consumer confidence and spending and growth in manufacturing are helping secure steady expansion.

In January, the manufacturing output rose 0.5 per cent and this week, the survey of business activity conducted by the Federal Reserve Bank of New York said it recorded its highest level in two years. The Consumer Price Index also rose last month, inching ahead 0.6 per cent, according to The New York Times reporting on figures from the Labor Department. Food and energy aside, that puts the index at 2.3 per cent over the last 12 months.

Despite record-high rates of unemployment and a drop in GDP, the Brazilian government has announced that it will allow workers access to inactive workers' funds, known as the Guarantee Fund for Time of Service (FGTS), reported The Rio Times. The move will grant close to 30.2 million workers access to those inactive accounts, of which there are more than 49.6 million.

Once the funds - totaling close to R$43.6 billion - are withdrawn, the hope is that after paying off debts, citizens will pour that money back into the economy through increased consumption, acting Planning Minister Dyogo Oliveira said during the announcement.

Government officials believe this may help to improve the anticipated less than 0.5 per cent growth for the economy this year, noted The Rio Times.

Moreover, foreign officials have forecast that the country will bounce back, according to The Financial Times.

"[Brazil] is a strong economy and once it shakes off its troubles it will go back to having an economic rally again," said executive director of strategy at Jaguar Land Rover, Hanno Kirner. "It has got resources, it has got a young dynamic population. It has got everything in the long term."

According to international media development organization DW Akademie, Siemens of Germany will pour 189 million euros in funding toward a new Mexican plant that will generate 1,000 jobs over the next decade.

The announcement followed a conversation between Economics Minister of Mexico Ildefonso Guarjardo and Siemens CEO Joe Kaeser last week. The European company already has nine plants and three additional centers in Mexico and has continued to see growth over its 100 years of partnership.

As the Mexico chief for Siemens Louise Goeser said, it is a great market because Mexico is "competitive, with a huge potential for growth."

 

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