Global Talent Update - March 2019

GlobeEurope, Middle East and Africa

For an issue initially characterised as proof of the stark political polarisation dividing residents of the U.K., the separation of Britain from the European Union as voted upon in the 2016 Brexit referendum has evoked frustration among those all over the country's political spectrum. BBC News reported that as things currently stand - barely a week away from the agreed-upon separation date of 29 March 2019 - much of this exasperation centers around one particular target: U.K. Prime Minister Theresa May.

May seems committed to carrying out Brexit, but the PM's attempts at constructing agreements governing the future economic and diplomatic relationships between the U.K. and EU have been roundly rejected: Hard-line conservative members of Parliament (both in May's own Conservative party and smaller parties that are considerably more right-wing) think the current withdrawal terms make the U.K. too dependent on Europe, while Labour and other left-leaning MPs are generally against Brexit to begin with but claim they hope to ensure any separation that must occur doesn't make life difficult for the average Briton.

In a 20 March move that drew further criticism, May addressed the U.K. from No. 10 and blamed MPs for Brexit confusion, saying the public needed a clear decision on the matter. Meanwhile, according to the Guardian, Labour leader and outspoken progressive Jeremy Corbyn's priorities are ultimately in line with May's - negotiating a delay and avoiding a "no-deal Brexit" - despite their political opposition, but he also has not publicly ruled out the possibility of encouraging fellow MPs to vote on Article 50's revocation.

The British PM met with representatives from the EU's 27 member states 21 March in Brussels, Belgium, to plead her case for a delay of three months, before Article 50 formally goes into effect and U.K. separates from the conglomeration of nations. Another BBC News report stated that while EU Council President Donald Tusk and his peers are open to offering the extension that May seeks, they will only do so if the U.K. House of Commons can agree on the current withdrawal deal. Tusk has also stated that the current agreement cannot be changed in any fundamental way, but certain smaller-scale alterations might be possible to help ensure the agreement of any particularly recalcitrant MPs.

Asia-Pacific

Although the economy of Japan has seen its share of difficulties during the past several months, the Cabinet Office of Prime Minister Shinzo Abe's government generally characterised the market as "modestly improving" or something along those lines throughout this period. That changed 20 March, when the Office acknowledged economic conditions were unfavorable due to poor performances within Japan's export market and industrial sector.

According to Bloomberg, this and other distressing economic metrics, such as the expectation that Japanese gross domestic product will see a 2.5 per cent contraction during 2019's first quarter, could turn the tide of public opinion against Abe's administration. Financial leaders such as the Bank of Japan's board of governors are also beginning to dispute the wisdom of the gradual quantitative easing policies intended to create 2 per cent inflation, with dissenters saying they may not be sufficient to deal with the country's monetary problems.

24 March marked the occasion of Thailand's first democratic elections in more than five years. The Palang Pracharat party, which is pro-army, seized the popular vote.

These results will also have considerable significance for the country's economic future. According to Asia Times, progressive-populist Future Forward party candidate Thanathorn Juangroongruangkit, who views the junta as draconian and beholden to Thailand's business-elite sector in Bangkok, was hugely popular with young voters. Sudarat Keyuraphan, leading exiled former PM Thaksin Shinawatra's Pheu Thai party, was supported by the poor rural population who were deeply committed to Shinawatra. Both these candidates - and current PM Prayut Chan-ocha - pitched populist initiatives including farm subsidies and welfare safety nets to assist the poor.

Americas

While many of the world's countries have seen a slowdown in one or more metrics of their economic stability, the U.S. managed to largely avoid any notable adverse consequences - until recently. The latest edition of the Employment Situation Survey issued by the Labor Department's Bureau of Labor Statistics, charting the American labor force in February 2019, found that nonfarm payroll organizations in the U.S. added only 20,000 jobs during the month. This represents a massive drop-off from January, in which businesses across all industries added a whopping 311,000 jobs to their ranks. Unsurprisingly, the unemployment rate also dropped to 3.8 per cent from the previous month's 4 per cent.

Some economists stated, at various intervals during the American jobs boom of the past two years, that growth within the labor force was too high and too consistent to not reach an eventual choke point. Yet a month-to-month drop of this size is notable by just about any standard. The loss of 31,000 jobs in construction served as the major factor behind the country's low employment growth, large enough to offset gains in professional services (42,000 positions) and healthcare (21,000 new jobs). Wage expansion ended up being the biggest positive in this latest round of U.S. economic data: Average hourly earnings rose by 3.4 per cent on a year-over-year basis.

The economic reform promised by new Brazilian President Jair Bolsonaro in his successful 2018 campaign will likely take some time to materialize, as is almost always the case for any new chief executive's plans of that kind. In the meantime, the economy of Brazil is expected to proceed at a slow pace of expansion during 2019. According to Bloomberg, economists surveyed by the country's central bank, in a report released 18 March, reduced their forecast for the nation's 2019 growth to 2.01 per cent and dropped their benchmark Selic rate projections for the end of 2020 to 7.75 per cent, down from 8 per cent in the last iteration of the survey. The news provider noted that Brazilian economic activity also fell by 0.41 per cent in January 2019, which was worse than economic experts' expectations of a 0.2 per cent decline.

On the other hand, a separate Bloomberg report from later in the day on 18 March noted that Brazil's Ibovespa benchmark equity index had risen to 100,000, an all-time high representing a gain of 14 per cent thus far for this year. Rumors that Bolsonaro's controversy-inciting pension reform plan would pass muster with the nation's Congress fueled this dramatic surge in the markets. David Beker, Latin America equity strategist for Bank of America Merrill Lynch, told Bloomberg the reform would likely pass the lower legislative house in June. That said, three and a half months is a long time in economic terms, so investors will likely follow this issue's progress closely.

 

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