Staffing Industry: Global Recovery
Off life-support. Still in treatment.
The recent recession had all the characteristics of a contagious virus, infecting the world’s economies one after the other and provoking different symptoms in each. Today, as each region begins treating the underlying causes, the prognosis is still in question. Many global markets will make a full recovery fairly soon. Others will continue to suffer for the foreseeable future. And a few are faced with potentially life-altering decisions that will affect the business environment for years to come.
According to the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD), overall economic growth for 2011 will be around 4.5%. Compared to historical growth after a recession, this figure is relatively low. Most economists attribute this to the underlying issues, which still must be addressed – politically – within each market.
In addition, unlike past recessionary periods, the most recent recession affected advanced economies far more than emerging economies. And just as the current crisis began in the most established economies and rippled to the emerging ones, much of the recovery’s progress rests on the speed at which the established economies can recoup their position as the world’s economic engines.
According to the IMF, “Although many emerging economies are seeing high growth again, they continue to rely significantly on demand from advanced economies. Emerging economies that relied heavily on demand from these economies will therefore have to rebalance growth further toward domestic sources to achieve growth rates similar to those before the crisis, helping the required external rebalancing.”
Businesses with the foresight to take advantage of this lack of equilibrium have an opportunity to grow their business while the competition is still struggling to recover.
The 2011 economic forecasts and hurdles vary widely:
Africa and Middle East. Forecast to grow at 5.5% in 2011, amid a recovery in exports and commodity prices, combined with robust domestic demand. Oil exporting countries will see strong growth on the back of strengthening oil prices. Overall, oil exporting countries were projected to record GDP growth of seven percent in 2011. Middle-income countries in the region were expected to grow by 3.6% in 2011, compared with the 1.7% contraction in GDP growth recorded in 2009. South Africa’s economy is expected to expand by 3.5% in 2011. Staffing forecast: Oil exporters are expected to slowly restart delayed construction projects, especially those in the public sector. Commodity and manufacturing exporters have a strong market in China.
Asia. Forecast to grow at nine percent overall, with India growing by 8.4% in the next fiscal, driven by robust industrial production and macro-economic performance. China is expected to grow at an even faster rate of 9.6 per cent in 2011, driven by domestic demand. Robust demand from China, India and Indonesia is benefiting other Asian economies. Staffing forecast:* Increased staffing is expected in the commodities, machinery, capital goods and financial industries, driven by China’s extensive import demands.
Europe. Forecast to grow 4.2% in 2011. Unprecedented European policy initiatives—the European Central Bank’s Securities Markets Program and euro area governments’ European Stabilization Mechanism— have reduced risks. However, underlying sovereign and banking vulnerabilities remain a significant challenge amid lingering concerns about risks to the global recovery. As an emerging economy, Eastern Europe was less affected, but still relies upon advanced economies to realize growth. Staffing forecast:* Manufacturing capacity will continue to expand, though demand within Europe will be tempered. New policies extending the retirement age and reducing state employee rolls may offer opportunities to staffing firms.
Latin America. Forecast to grow at seven percent. The recovery in Latin America is being led by Brazil, where real GDP growth has been close to 10% since the third quarter of 2009. The Brazilian economy is now showing signs of overheating. Staffing forecast:* Commodity exports remain strong, while lower levels of U.S. consumer disposable income may negatively affect tourism. Attempts to control public debt may affect public construction, while private construction may increase, due to a rising standard of living.
United States. Forecast to grow at 2.3% in 2011. With growth far weaker than in previous recoveries, the gap between actual and potential output will remain wide, even though potential growth has itself suffered temporarily from the crisis. The unemployment rate is therefore expected to remain stubbornly high. High debt levels continue to threaten the recovery, while government officials struggle to rebalance the economy. Staffing forecast:* Pent-up consumer demand is expected to affect the service, communications and electronics industries. Health care remains an area of immediate need, as does education.
Overall, the picture is improving. Proof that there’s much truth in the Friedrich Nietzsche quote: “That which does not kill us makes us stronger.”
For additional details on regional forecasts, visit www.imf.org and select World Economic Outlook (WEO), October, 2010.
*Staffing forecasts are based on interpretations of IMF macroeconomic forecasts and the Global Financial Stability Report and should be adjusted based on your region’s current economic status.
