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Taplow Group – 10th 2020 Global Business Overview

Author: socialmedia@taplowgroup.com/Monday, November 2, 2020/Categories: News

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The global pandemic has seen businesses affected across every sector, in all parts of the world. Taplow partners across the globe have combined to give you the local and regional insights.

Key Findings

Companies - Companies are struggling with fast changing and fluid local and countrywide Government regulations. These changes are likely to pick up speed over the next 3 to 6 months, particularly in the northern hemisphere as the winter approaches.

Executives - Once again Working from Home (WFH) is becoming the norm, many creative orientated teams are suffering through lack of interaction. Executives are also grappling with the fast-evolving government regulations.

Employees - Mental health and welfare issues are coming to the fore as government services deal with the pandemic. WFH also brings loneliness and anxiety issues to the fore.

According to a survey by the International Monetary Fund (IMF), Internet penetration in sub-Saharan Africa has grown tenfold, over the last 20 years. This means that sectors like ICT, finance and insurance, the public sector, education, and retail trade are indeed perfectly poised to grow swiftly as the pandemic drives digitization.

South Africa
The South African Government has confirmed another big bailout for the country's struggling national airline. Finance Minister Tito Mboweni said $640m (£492m) would enable South African Airways to implement a rescue plan.

South Africa's President, Cyril Ramaphosa, has dismissed "alarmist rumours" about the country's possible return to stricter coronavirus regulations. The country has recorded a surge in Covid-19 infections over the last week, according to Health Minister Zweli Mkhize.

GDP Growth Rate in South Africa averaged 2.11 percent from 1993 until 2020, and a record low of -51 percent in the second quarter of 2020.

Asia is well placed for economic recovery compared to the rest of the world because mostly it has successfully contained the coronavirus, said Andrew Tilton, chief Asia economist at Goldman Sachs. Globally, he said momentum in the industrial sector remains good and he is “reasonably upbeat on the recovery going into 2021.”

Conditions in Australia continue to improve. In recent weeks, the major winter sporting codes held their finals competitions with crowd attendance. The various states in Australia are progressively easing restrictions on border crossings and interstate travel is becoming a reality again. A limited travel “bubble” has opened with New Zealand and positive discussions are being held regarding Singapore, Japan and Taiwan.

Australia remains one of only nine countries around the world to hold a AAA credit rating from all three major credit rating agencies. Agriculture, mining, food, and fibre continue to provide export earnings for Australia while tourism is limited. The Australian Government’s “balance sheet was strong before the pandemic” and “Australia's economy is beginning to recover from its first recession in almost 30 years” and will according to the Australian Treasurer “rebound strongly once borders open”.

There is still a long way to go in recovering from this health and economic crisis but the Australian economy is fighting back. Around 60 per cent of the 1.3 million people who lost their job or were stood down on zero hours in April are now back at work. For the next calendar year, the economy is forecasted to grow by 4.25 per cent, and unemployment to fall to 6.5 per cent by the June Quarter 2022.

India's economy picked up speed in September as a revival in demand and business activity helped drive the South Asian nation toward recovery from the pandemic-induced slump.

India improved its ranking in World Bank's Doing Business Report by 14 spots over last year and was ranked 63 among 190 countries in the 2020 edition of the report.
India's Foreign Direct Investment (FDI) equity inflow reached US$469.99 billion between April 2000 to March 2020, with maximum contribution from services, computer software and hardware, telecommunications, construction, trading, and automobiles.

India adds 2,320 MW solar capacity in COVID-19-hit January-September period - From January to September, when the Covid pandemic disrupted the economy, India added 2,320 MW of solar energy power, official data indicates.

Passenger vehicle sales, one of the key indicators of demand, rose 26.5 per cent in September from a year ago. Retail sales too showed signs of stabilizing, even though it was nearly 70 per cent below the year-ago level, according to ShopperTrak.

US-based motorcycle manufacturer Harley-Davidson partnered with the country's largest two-wheeler manufacturer, Hero MotoCorp, to sell and service its products in the nation. Hero MotoCorp will produce and market a range of luxury motorcycles under the Harley-Davidson brand name as part of a licencing agreement.
Tata Group to invest Rs5,000 crore to set up phone component plant for Apple in Tamil Nadu. Titan’s precision engineering division will provide expertise for project to be set up in Hosur industrial complex. The investment will be scaled up depending on the level of sourcing from the facility and could even touch Rs8,000 crore.

Singapore’s unemployment rate rose to 3.6 per cent in September but at a slower rate compared to previous months, as the country reopened from a COVID-19-induced slowdown. The figures released on Friday (Oct 30) showed that the overall unemployment rate crept up by 0.2 percentage points from 3.4 per cent in August, which had already surpassed the record set during the global financial crisis in 2012. Officials warned that labour market conditions will stay soft amid the prolonged economic downturn.

After more than 160 years in Singapore, Robinsons is closing its last two department stores at The Heeren and Raffles City Shopping Centre. This comes after several retail behemoths have announced store closures, both in and out of Singapore earlier this year. In April, Esprit announced it would close all 56 retail stores in Singapore, Malaysia, Taiwan, Hong Kong and Macau by the end of its financial year on Jun 30. In Singapore, the fashion retailer had 11 stores, including at ION Orchard, Paragon, Suntec City and Jewel Changi Airport. In October, H&M said it is planning to close hundreds of stores next year as COVID-19 crisis drove more shoppers online.

Online shopping has become increasingly popular among consumers amid changing purchasing behaviour and COVID-19 restrictions. Demand for large-scale department store concepts has also weakened significantly, with official data showing a 35.3 per cent drop in retail sales at department stores in August.

New Zealand
The New Zealand Activity Index (NZAC) showed a recovery in September, with activity up 1.0% on September 2019. Most constituent indicators were above 2019 levels such as traffic movements, grid demand, and the performance of manufacturing index. Other indicators, such as business confidence and job advertisements, were still below last year’s levels. The number of people receiving income support (including the COVID-19 Income Relief Payment) had declined from August but was still high compared to September 2019.

The NZIER Quarterly Survey of Business Opinion (QSBO) showed that business sentiment and activity indicators improved in the September quarter, reflecting a combination of fiscal support, pent-up demand, strong housing and construction activity and a pick-up in domestic tourism.

NZIER report that the strong pipeline of Government construction work over the coming years is supporting a rebound in construction confidence, while services sector firms remain relatively cautious about the outlook, with a net 49% expecting worse outcomes ahead.

Sentiment on the general business outlook has improved but remains deeply pessimistic with a net 39.4% of firms expecting the outlook to deteriorate. Employment expectations were positive, with net 10% of firms expecting more hires this quarter, and firms are experiencing increased difficulty in finding skilled labour.

The region’s predicted “2nd wave” of Covid19 is here as the winter starts. A number of key countries have announced either complete lockdown or regional lockdowns that will undoubtedly weaken the return to economic growth. The region is still several percentage points below pre Covid GDP.

The lockdown decided by the President came into force last Friday, October 30th, 2020 at 0:00 am. A containment intended to be more flexible than that of the spring. The head of Government, who justified the measures announced by the need to "face the violence of the second epidemic wave" of Covid-19, was accompanied by some of his ministers including Bruno Le Maire (economy) who detailed the business support plan estimated at €15 billion per month (€20 billion has been provided for in the amended finance law for 2020).

New containment measures have forced the government to revise its GDP decline forecast for this year. The Minister of Economy indicated that the wealth produced in 2020 would fall by 11%. The problem is that the second wave of the epidemic and the new health measures will again have a negative impact on the end of the year. Bruno Le Maire said he thought that GDP would fall by 15% in November with the new containment. A slower pace than last spring when the GDP plunged by 30% during the two months of the first confinement but still impressive.

French household consumption spending fell sharply in September after a small rise in August, due to a "significant drop" in purchases of manufactured goods and food. These expenses thus fell by 5.1% last month, after having risen by 2.2% in August. This decline in September was mainly due to a sharp drop (-6.8%) in purchases of manufactured goods, particularly textiles (-15.9% after +22.0% in August).

The effects of the health and economic crisis are having a strong impact on the framework of labour market. The drop in recruitment could particularly affect young graduates, older workers and job-seeking managers.

In the fourth quarter, companies could recruit between 37,000 and 47,000 managers, a volume that is however subject to caution given the uncertainties on the health front. Overall, over the year, the number of executive recruitments would be 30 to 40% lower than the record reached in 2019. The executive job market was experiencing steady growth and 281,300 executives were hired last year. The health and economic crisis have since changed this situation.

Generally, more affected by episodes of crisis, young graduates find themselves in a more difficult position when senior managers in posts worry about their ability to bounce back if they lose their jobs. Jobseekers, on the other hand, face a major reduction in the number of jobs available on the managerial labour market.

The UK Government has fragmented rules to the Covid19 2nd wave. Governments in Wales and Northern Ireland have instigated a “circuit breaker” complete lockdown. Scotland has introduced a regional lockdown and England is going into a month long lockdown as of 5th November. Recently there has been a levelling off of cases albeit from a high level.

Government has instigated a range of support packages to try to stop mass redundancies. Currently unemployment stands at 4.5% but is predicted to climb to 8%+ by year-end.

GDP growth fell by 20.4% in Q2 2020, it has recovered more than 50% of this loss. However growth is slowing and will be hampered by winter lockdowns. The service sector has seen the best recovery to date and manufacturing figures although fragile are in the positive.

The Americas and particularly regions in USA are continuing to see uncertainty of the pandemic and elections create economic stagnation. Although the USA continues to show economic recovery, it is showing signs of slowing down and is not back to pre Covid levels.

South America
The continent is dealing with the pandemic from a weak economic base. Countries are adopting a variety of measures, but many are unable to effectively support businesses and this will no doubt lead to an increase in unemployment.

Canada has seen a partial lockdown in cities such as Toronto that has resulted in the number of cases reducing. The Canadian Government has a determined and focused program to significantly reduce the virus transmission.

These last few weeks have been a mix of more opportunities and exceptional levels of competition on price and “showing leg”.

We have had several new client initiatives, but none have yet signed a new agreement. Concern over hiring at the executive level during this period while layoffs are continuing is causing concern despite a perceived need to go forward on critical roles. In one recent case, our competition presented at least 10 prospective candidates with their proposal to prove they had a ready store of candidates. The client was not sophisticated enough to understand why that might be a problem. Others are just stalled as the fear is that income and earnings will be hurt further by recent market fluctuation.

The national election is on November 3rd but if it is close there might be a legally contested outcome delaying the final result. President Trump has been very vocal about that. Normally a level of uncertainty in the world can help us to close deals. In this case, that is not happening and as our national leader chooses to exacerbate the impact of the virus and has issued rules impacting our health care and made a very controversial appointment to our Supreme Court causing even more uncertainty and disruption. We expect the softness and uncertainty to continue.

We hope that you, your family, and work colleagues continue to stay healthy and safe. We at The Taplow Group are here to support you and your business through this crisis. We will be back with another update soon.


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