Global Talent Update - May 2016

GlobeEurope, Middle East and Africa

The labour markets in Germany and the U.K. held steady as inflation declined across the eurozone. Investments in agriculture across Africa could help to significantly strengthen the economy in the near future, and though the economic situation in the Middle East remains largely varied, one Dubai leader has launched a campaign to combat unemployment and poverty.

The employment rate in the U.K. reached a record 74.2 per cent with wages also on the uptick in March as total pay with bonuses grew 2 per cent, reported The Guardian. The number of employed individuals across the U.K. was up 44,000 to reach 31.58 million based on the rolling quarter-on-quarter measures used by the Office for National Statistics. Also notable was the drop in unemployment, down 2,000 from the previous month.

Although this put to ease government fears that the threat of a leave vote in the European Union referendum would negatively impact the labour market, uncertainty remains. The looming June 23 vote and the ensuing economic implications if Britain is to leave the EU are still up for debate. Some fear, including Mark Carney, the governor of the Bank of England, that this ‘Brexit’ could be the tipping point of the economy, rapidly leading to a recession, according to the New York Times.

The biggest impact would likely be seen on free trade as close to half of EU exports come from Britain. A Brexit would almost certainly hinder the flow of trade, which is tied to the jobs of more than 3 million people.

“It is absolutely clear we would incur significant economic costs if we left the European Union,” said Paul Johnson, director of the Institute for Fiscal Studies, an independent research institution in London. “Free trade with the E.U. is worth quite a lot, and foreign direct investment would be impeded. All of the serious economic models show that.”

In Germany the number of employed personnel in quarter one rose 1 per cent to 43.1 million, reported Nasdaq. Projections from the government are that employment will rise to 43.5 million in 2016, and close to 44 million in 2017. Unemployment remained at 6.2 per cent in April, the lowest it has been since the reunification of Germany in 1990.

Overall, eurozone annual inflation was -0.2 per cent, down from 0 per cent in March and 0 per cent at this time last year.

At the recent 2016 Grow Africa Investment Forum held in Kigali, Rwanda, it was reported that more than $500 million in investments from new private-sectors was applied last year. This brought the total to $2.3 billion, by 200 companies in Africa and around the world, reported All Africa. In the past four years these investments have created 88,000 jobs, and last year alone employed 30,000 people. Government officials and business leaders agree that proper policy must be followed to ensure the continuation of this upward trend.

"Agriculture is the sector that will transform Africa. Our industrialisation will be driven by value-added processing of our agricultural products. However we need to tackle key bottlenecks like infrastructure and farmers' access to finance and markets," President of Kenya Uhuru Kenyatta​ said.

Uncertainty looms over many Middle Eastern economies amidst falling oil prices and the fear of water scarcity in the coming years, according to a newly released World Bank report.  Tunisia and Saudi Arabia have already requested loans to assuage economic troubles. According to Reuters Africa, Tunisia has been approved by the World Bank for a $5 billion loan over the course of five years to promote economic growth and create more jobs.

Saudi Arabia, the world leader in oil exports, has also requested a loan from foreign banks, reported the Middle East Eye. The five-year, $10 billion loan is intended to reverse the gap in finances.

The global foundation aimed at tackling regional education, poverty and unemployment issues, Mohammad Bin Rashid Al Maktoum Global Initiative, was launched with a starting budget of $272 million, reported Arabian Business.

"The world today is facing great challenges on all levels; in terrorism, wars and mass immigration and the only solution lies in human development which can be achieved by educating people and helping them build their future," said Sheikh Mohammed bin Rashed al-Maktoum, Emirati Prime Minister and Dubai ruler.

Asia-Pacific

Economic news was generally positive across Asia-Pacific in April.

Japan received encouraging economic reports this month as its gross domestic product grew by an annualised 1.7 per cent in the first three months of the year, The Japan Times reported. The increase defied analyst forecasts that the economy would experience two consecutive quarters of decline, and helped steer the country away from entering a recession. Data also revealed that for the fiscal year ending in March, nominal GDP posted its highest increase in nearly 20 years, growing 2.2 per cent. Wages were also up, increasing 0.6 per cent from the quarter prior.

In an effort to continue the upturn and further stimulate the economy, Prime Minister Shinzo Abe recently announced a series of goals for his administration, according to Nikkei Asian Review. The government aims to increase economic output to 600 trillion yen, or $5.4 trillion by 2020, along with planning to raise wages and work conditions for "non-regular" workers in Japan. Non-regular workers include part-time employees and contractors, and amount to 20 million in Japan.

In Australia, the total number of employed persons rose to its highest level in recorded history, reaching 11.91 million people in April, Business Insider Australia reported. During the month, nearly 11,000 jobs were added, contributing to 2.1 per cent growth in total employment over the year. Part-time employment grew by 21,300 in April, with part-time work posting 4.48 per cent growth over the year. Much of the job growth was seen in the tourism, healthcare and hospitality sectors, according to The Sydney Morning Herald. The employment gains also kept the unemployment rate at 5.7 per cent, which is its lowest level since September 2013.

"April's Australian labour market data are unlikely to prompt the [Reserve Bank of Australia] to follow May's rate cut with another reduction at the next meeting in June – we still think the next cut will come at the August meeting," said Paul Dales of Capital Economics in an interview with The Sydney Morning Herald.

Malaysia also saw positive economic news. Bank Negara Malaysia confirmed analyst expectations to hold the Overnight Policy Rate steady at 3.25 per cent, New Straits Times Online reported. The news points to economic growth for the country, which also expects to see wages and employment increase along with a rise in private consumption.

"Going forward, economic activity is expected to improve with domestic demand remaining the key driver of growth," the bank said in a statement.

The encouraging economic news comes as Deputy Human Resource Minister Ismail Abd Muttalib expressed his commitment to supporting more Malaysian youths entering the workforce, according to Free Malaysia Today. Muttalib said that the ministry aims to have 35 per cent local workers become skilled workers by 2020 and has so far secured 28 per cent. The remarks were given at a ceremony recognising the 2016 World Day for Safety and Health at the Workplace.

Americas

Despite disappointing job gains in April, the U.S. is still experiencing economic growth.  Although much of Latin America remains in a recession, Mexico, Central America and the Caribbean are predicted to benefit from the U.S. recovery.

A rebound in industrial production and housing gains, as well as continued growth in job gains, consumer confidence and retail sales in April all point toward a strengthening U.S. economic outlook, according to Reuters. Additionally, consumer prices saw their biggest rise in more than three years this month, increasing 0.4 percent from March.

Total nonfarm employment rose by 160,000 jobs in April, extending the longest streak of private-sector job growth to date. Over the last 74 months straight, businesses in the U.S. have created 14.6 million jobs, reported the White House. More notably however, private employee earnings have increased by 3.2 percent.

"The combination of higher prices, housing gains and industrial production support the narrative of a second-quarter rebound in GDP, and will stir talks of the necessity of at least one Fed hike later this year," said Jay Morelock, an economist at FTN Financial in New York.

Overall, the economic outlook in South America remains largely mixed. On the heels of recovery from the global recession, Latin America is struggling to bounce back, according to the International Monetary Foundation. Growth here is still down and is likely going to drop for two consecutive years for the first time since 1983. Although according to the IMF, the economy is forecast to return to growth next year with a GDP rate of 1.5 percent.

However, these numbers are masking modest growth in other neighboring countries, according to CIHAN. Only a small number of economies are set to face recession, while others are growing steadily.

Panama currently looks most promising and is expected to grow by 6.1 percent this year, reported News Ghana. Nicaragua is close behind and economic growth for Colombia is forecast at 2.5 percent.

The Mexican economy is set to grow by 2.4 percent. The IMF offered mild support to Mexico, noting that the country will be helped by "healthy private domestic demand and spillovers from a strong U.S. economy," predicting that "The depreciation of the peso and lower electricity prices should boost manufacturing production and exports." Mexico is also benefiting from lower oil prices.