1

AutumnE c o n o m i c O u t l o o k

2018

2

WORLD ECONOMY

TABLE OF CONTENTS

GLOBAL CHALLENGES

EUROPECHINA

BELGIUM

SPECIAL TOPIC:

HR Tech

ECONOMY

LABOURMARKET

UNITED STATES

FEDERGON ACTIVITIES

3

«Global growth is projected to reach 3.7 percentin 2018 and 2019, […] but the expansion is

becoming less even, and risks to the outlook are mounting.»

WORLD ECONOMYRisky business?

(Source: IMF - World Economic Outlook Update, July 2018)

4

GLOBAL GDP GROWTH

4,82

2,48

2,99

4,28

5,39

4,89

5,47 5,57

3,04

-0,11

5,39

4,28

3,51 3,49 3,58 3,453,27

3,74 3,73 3,65 3,66 3,64 3,58 3,59

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

IMF GDP projections

(Source: IMF – WEO Data, October 2018)

Projection of 3,7% in 2018 & 2019, BUT, growth in Q2 2018 is divergent among countries

Due to:• rising oil prices• trade tensions• domestic political uncertainty• higher yields in the US

0,6%

1,0%1,2%

1,3% 1,4% 1,5% 1,6% 1,7%1,9%

2,3%2,4% 2,5%

2,7% 2,7% 2,8% 2,8% 2,9%

3,3%

3,8% 3,9% 4,0%

4,4%4,6%

5,0% 5,0%

6,7%

Denm

ark

Japa

n

Italy

Uni

ted

King

dom

Belg

ium

Nor

way

Mex

ico

Fran

ce

Germ

any

Port

ugal

Czec

h Re

publ

ic

Finl

and

Spai

n

Aust

ria

Kore

a

Net

herla

nds

Uni

ted

Stat

es

Swed

en

Lith

uani

a

Slov

ak R

epub

lic

Isra

el

Latv

ia

Hung

ary

Chile

Pola

nd

Chin

a

5

GLOBAL GDP GROWTH

GROWTH IN GDP Q2 2018 (YOY)(Sources: OECD; IMF – World Economic Outlook Update, July 2018)

-1,00

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

01/2

000

06/2

000

11/2

000

04/2

001

09/2

001

02/2

002

07/2

002

12/2

002

05/2

003

10/2

003

03/2

004

08/2

004

01/2

005

06/2

005

11/2

005

04/2

006

09/2

006

02/2

007

07/2

007

12/2

007

05/2

008

10/2

008

03/2

009

08/2

009

01/2

010

06/2

010

11/2

010

04/2

011

09/2

011

02/2

012

07/2

012

12/2

012

05/2

013

10/2

013

03/2

014

08/2

014

01/2

015

06/2

015

11/2

015

04/2

016

09/2

016

02/2

017

07/2

017

12/2

017

05/2

018

10-year Treasury yields - 2-year Treasury yields 10-year Treasury yields 2-year Treasury yields

6

GLOBAL CHALLENGES: Déjà vu?

(Source: Fred Economic Data)

Yield curve(10-year Treasury yields minus 2-year Treasury yields; thus showing the differenceof compensation received for debt of 10y and 2y maturity)

showing a downwardslope

• Warning signal?• Predicted last 7

recessions

2001: dot-com bubble 2008: financial crisis

7

GLOBAL CHALLENGES: Monetary policy central banks

Since financial crisis of 2008: central banks maintained an expansionary monetary policy resultingin a lower interest rate

Objectives- Stimulating economy- Keep inflation under control

Risks- Low saving rates- More risky investments Shadow banking!

(The ECB will maintain its low interest rate for at least another year)

8

GLOBAL CHALLENGES: Monetary policy central banks

Post financial crisis, central banks alsoincreased money supply by adoptingQuantitative Easing (QE)* Policies

* Quantitative Easing is a monetary policy whereby central banks increase the money supply by buying bonds and otherdebt instruments.

(Source: Yardeni Research; The politics of quantitative easing –SOMO; June 2018)

Although effective in theory, QE mightcreate several risks:

1. Oversupply of liquidity creates a push towards more risky assets

2. Strenghtens wealth inequality3. Creates debt-led economy4. Encourages outflow to emerging markets;

creates instability and risk

(The ECB will end its quantitative easing programme at the beginning of 2019)

9

GLOBAL CHALLENGES: Currencies in free fall

Turkish Lira to USD Caused by- High levels of debt in foreign

currencies- e.g. dollar-denominated

debts + a rise in US interest rates

- Intense trading on foreign exchanges

Indonesian Rupiah to USD

Argentine Peso to USD

Might cause spillover effects to other economies.

(Sources: XE.com Inc; BIS; )

60

66

43

2017 SEM 1: Global debt in $trillion

Government Nonfinancial corporates Households

29

37

31

2007: Global debt in $trillion

Government Nonfinancial corporates Households

Total global debt: $97

trillion

10

GLOBAL CHALLENGES: Global debt at all time high

Global debt to GDP: 207

(Source: BIS – Annual Economic Report, June 2018)

Total global debt: $169

trillion

Total global household debt: + 38,47%

Total global nonfinancial corporates debt: +78,38 %

Total global government debt: +106,9 %

Global debt to GDP: 236

11

GLOBAL CHALLENGES: Oil Price

$ 84,94

$ 60,00

$ 65,00

$ 70,00

$ 75,00

$ 80,00

$ 85,00

$ 90,00

01/2

018

01/2

018

01/2

018

02/2

018

02/2

018

03/2

018

03/2

018

04/2

018

04/2

018

05/2

018

05/2

018

06/2

018

06/2

018

07/2

018

07/2

018

07/2

018

08/2

018

08/2

018

09/2

018

09/2

018

Brent Crude Oil

(Source: Macrotrends Data)

+27%

Significant rise of oil price in 2018

- Iran oil exports are declining ahead of US sanctions on Iran (Nov 2018)

- Trade war between US & China (Asian demand for oil has lowered )

12

GLOBAL CHALLENGES: Brexit

Britain will leave the EU on March 29th, 2019.Causes turmoil.

So far, no Brexit deal: - Chequers plan rejected by EU- Irish border

- Norway style deal (UK stays in single market and a customs union)

- Canadian style deal (more standard trade deal)- New referendum?

Hard Brexit?! (no deal):- Hard border in Ireland- Increased processing time for goods- UK has to comply to EU external tarrifs- Expats’ status becomes unclear- …

13

GLOBAL CHALLENGES: Brexit

14

GLOBAL CHALLENGES: Trade wars

Worries about the ongoing trade war between US and China.

- Many sectors might be affected, due to:- complex international supply chains (e.g. sourcing components from China; assembly of products in China)

- China being an important international market (e.g. car industry)

Risk of higher costs for US companies and increasing prices of goods

(Source: Ingram Pinn’s illustration of the week – Financial Times April 6, 2018)

"The consequences of escalating trade actions are undeniable: higher prices in China and the U.S., less purchasing power for consumers in these countries, higher input costs, heightened financial market volatility, and possibly higher interest rates.

These effects would likely spill over from these countries.“- Jean-François Perrault, chief economist at Scotiabank

15

UNITED STATES

GDP Growth:+2,9% (Q2 yoy)

Fastest rate of GDP Growth since 2014; due to• business investments• consumer spending• tax cuts• increase in government spending

Consumer confidence is at all time high since 2000 • consumer confidence index September 2018: 138,4

However…- Congressional Budget Office (CBO) expects a

slowdown of US growth in 2019, due to: • slowdown of business investments• slowdown of government spending

(Sources: BEA; Euromonitor International; The Conference Board; CBO)

16

EUROPE

GDP Growth:+2,1% (Q2 yoy)

2,021,83

-0,33

0,33

1,88

2,41

2,04

2,66

2,202,03

1,81 1,73 1,67 1,63

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

IMF GDP projections

Slower than expected growth in Q2 2018• (Q1: 2,5% yoy; Q2: +2,1% yoy)• Investments and household consumption are the main drivers of GDP growth• Net export affected GDP negatively• Lowest Eurozone PMI in two years: 52,7 (October 2018)

(Sources: Eurostat; IMF – WEO Data, October 2018; Trading Economics)

17

EUROPE: Consumer confidence

-32,5

-30,0

-27,5

-25,0

-22,5

-20,0

-17,5

-15,0

-12,5

-10,0

-7,5

-5,0

-2,5

0,0

2,5

5,0

dec/

05

jun/

06

dec/

06

jun/

07

dec/

07

jun/

08

dec/

08

jun/

09

dec/

09

jun/

10

dec/

10

jun/

11

dec/

11

jun/

12

dec/

12

jun/

13

dec/

13

jun/

14

dec/

14

jun/

15

dec/

15

jun/

16

dec/

16

jun/

17

dec/

17

jun/

18

Consumer confidence EU Consumer confidence Belgium Long term average Long term average

(Source: European Commission Services)

Consumer confidence levels remain high

18

CHINA: SLOWDOWN OF GROWTH

GDP Growth:+6,7% (Q2 yoy)

GDP (Q/Q-4)

(Source: OECD; Euromonitor International; CNBC)

Economic growth below expectations,slowest growth since 2009. Due to:- Trade dispute with US- Paying off debts

7,40

%

7,50

%

7,10

% 7,20

%

7% 7%

6,90

%

6,80

%

6,70

%

6,70

%

6,70

% 6,80

% 6,90

%

6,90

%

6,80

%

6,80

%

6,80

%

6,70

%

6,50

%

2014

-Q1

2014

-Q2

2014

-Q3

2014

-Q4

2015

-Q1

2015

-Q2

2015

-Q3

2015

-Q4

2016

-Q1

2016

-Q2

2016

-Q3

2016

-Q4

2017

-Q1

2017

-Q2

2017

-Q3

2017

-Q4

2018

-Q1

2018

-Q2

2018

-Q3

Note: there is a lot of skepticism about the accuracy of China’s official GDP figures.

19

WORLD ECONOMY: In conclusion

Several global risks signal the need for

cautionBrexit

Oil price

Global debt

Inverted yield curve

US – China trade war

Divergent GDP Growth

Currency rates

20

«Last year our economy grew with 1,7%, a lot lessthan neighbouring countries such as Germany

(2,2%) , and the Netherlands (2,9%).»

BELGIAN ECONOMYSnail of Europe?

(Source: Trends, November 1st 2018)

21

BELGIUM: Economy

1,5%

1,0%

1,2%

1,4%

1,6%

2,0%

1,7% 1,7%

1,4%

1,6% 1,6%

1,4%

1,9%

1,5% 1,5%

1,9%

1,5%1,4%

1,7%

GDP (Q/Q-4)Inflation (sep 2018)

<> Eurozone inflation: 2,1%

(Source: NBB; Statbel; OECD)

2,8%

1,7% GDP Growth Q3 <> Eurozone GDP Growth: 1,7%

63,7% Employment rate (15-64 year) Q2<> Eurozone Employment rate: 67,2%

22

BELGIUM: Economy

-1,1

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

2006

M1

2006

M3

2006

M5

2006

M7

2006

M9

2006

M11

2007

M1

2007

M3

2007

M5

2007

M7

2007

M9

2007

M11

2008

M1

2008

M3

2008

M5

2008

M7

2008

M9

2008

M11

2009

M1

2009

M3

2009

M5

2009

M7

2009

M9

2009

M11

2010

M1

2010

M3

2010

M5

2010

M7

2010

M9

2010

M11

2011

M1

2011

M3

2011

M5

2011

M7

2011

M9

2011

M11

2012

M1

2012

M3

2012

M5

2012

M7

2012

M9

2012

M11

2013

M1

2013

M3

2013

M5

2013

M7

2013

M9

2013

M11

2014

M1

2014

M3

2014

M5

2014

M7

2014

M9

2014

M11

2015

M1

2015

M3

2015

M5

2015

M7

2015

M9

2015

M11

2016

M1

2016

M3

2016

M5

2016

M7

2016

M9

2016

M11

2017

M1

2017

M3

2017

M5

2017

M7

2017

M9

2017

M11

2018

M1

2018

M3

2018

M5

2018

M7

2018

M9

Business confidence Long term average

October 2018:

Business confidence levels are stagnant

23

BELGIUM: Labour Market

3,7

2,8

3,23,4

3,5

1,5

2,0

2,5

3,0

3,5

4,0

2012 2013 2014 2015 2016 2017 2018

Vacancy rate

Flanders Wallonia Brussels Belgium

Tightening labour market- Highest vacancy rate of Eurozone (avg. Eurozone sept 2018: 2,1)- Unemployment rate is slowly declining (avg. Eurozone sept 2018: 8,9)

3,6

8,9

13,3

6,2

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

20,0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Q1

Unemployment rate

Flanders Wallonia Brussels Belgium

(Sources: Statbel; Steunpunt Werk; )

24

BELGIUM: Labour Market – activity rate Q1 201857

,3%

62,2

% 63,8

% 65,4

%

65,6

%

65,9

%

66,3

%

67,7

%

68,1

%

69,5

%

70,6

%

71,1

%

71,1

%

71,2

%

71,4

%

71,8

%

72,1

%

72,2

%

73,3

%

73,5

%

74,2

%

74,4

%

75,0

%

76,0

%

76,1

%

76,2

%

76,9

%

77,2

%

77,3

%

77,9

%

78,3

%

78,6

%

79,0

%

79,7

% 81,8

% 84,0

% 86,4

%

Turk

ey

Mon

tene

gro

Wal

loni

a

Italy

Brus

sels

Croa

tia

Rom

ania

Gree

ce

Belg

ië

Pola

nd

Bulg

aria

Flan

ders

Luxe

mbo

urg

Mal

ta

Hung

ary

Fran

ce

Irela

nd

Slov

akia

EU a

vera

ge

Spai

n

Slov

enia

Cypr

us

Port

ugal

Aust

ria

Czec

h Re

publ

ic

Lith

uani

a

Finl

and

Nor

way

Latv

ia

Uni

ted

King

dom

Germ

any

Denm

ark

Esto

nia

Net

herla

nds

Swed

en

Switz

erla

nd

Icel

and

Belgium is still lagging behind in terms of activity rate (15-64 year)

(Source: Eurostat)

25

FEDERGON ACTIVITIES

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Hour

s(Q

/Q-4

)

TEMPORARY AGENCY WORK (hours – yearly growth)

BelgiumTotalWhite CollarBlue Collar

+2,21%+3,03%+1,64%

Q2 - 2018

FlandersTotalWhite CollarBlue Collar

WallonieTotalWhite CollarBlue Collar

+0,82%+2,58%-0,28%

+5,87%+5,14%+6,27%

SERVICE VOUCHERS

BrusselsTotalWhite CollarBlue Collar

+3,61%+2,08%+8,17%

6%

3% 2%

5%4% 4% 4% 5%

6%

9%

6%5%

7%

3%4% 5%

1% 2%

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Hour

s(Q

/Q-4

)

Hours – yearly growthBelgiumFlandersWallonieBrussels

+1,6%+2,3%+0,7%-0,6%

ClientsBelgiumFlandersWallonieBrussels

319 325204 85850 884 63 583

WorkersBelgiumFlandersWallonieBrussels

47 05731 7699 0436 245

26

FEDERGON ACTIVITIES

PROJECTSOURCING

Q2 - 2018

INTERIM MANAGEMENT

Hours (yearly growth)TotalEngineeringFinance

+4,3%+8,0%

+14,7%

ICTOfficeAndere

+6,6%-4,6%-1,3%

8%6% 7%

0% 1%0% -1%

1%

-3% -2% -2%1%

6%

10% 11% 11%

7%4%

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Hour

s(Q

/Q-4

)

Yearly growthAmount of assignmentsAmount of assigned Interim Managers

+8,46%+8,31%

15% 15%17%

13%

17% 16%

13%11%

14% 15%

10%

2%

-2%

3%6%

13%15%

8%

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Assi

gnm

ents

(Q/Q

-4)

27

FEDERGON ACTIVITIESOUTPLACEMENT

Q2 - 2018

RECRUITMENT, SEARCH & SELECTION

LEARNING & DEVELOPMENT

-1% -5%-14%

-6%

38%

-7%-14% -16%

-35%

-11%

11%5%

-12%2% 3%

-16%

2%-6%

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Tota

l (Q

/Q-4

)

Total Outplacement after individual dismissalOutplacement after reorganisation

3104 (-6,3%)2374 (-6,7%)730 (-5,1%)

Recruitment & SelectionEvaluation & AssessmentCoachingHR ConsultancyLoopbaancheque

+20%+5,5%-6,3%+6,1%-7,0%

Turnover (yearly growth) Total +16,0%

-3%0%

6%10%

14%11%

20%16%

11%

25%

6%

17% 17%

0%

13%15%

10%

15%

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Turn

over

(Q/Q

-4)

Turnover (yearly growth)Total -1,8%%

0%

25%

-2%-7%

14%

-19%

-1% 2%-5%

13%

-1%4% 5%

-7%2%

-4%4%

-2%

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Q316

Q416

Q117

Q217

Q317

Q417

Q118

Q218

Turn

over

(Q/Q

-4)

28

«The technology you use impresses no one. The experience you create with it is everything»

– Sean Gerety

Special topic: HR TechOpportunity or threat?

29

HR Tech

Survey among 54 RSS professionals, to get an

impression of how the RSS sector perceives the impact of digitalization on its activities

HR Tech tools: digital tools which support the core process of RSS activities; e.g. recruiting, hiring, candidate tracking

The implementation of HR Tech Tools is seen

as an opportunity to improve ourmembers’ RSS activities, both in terms of

efficiency and speed

51% of respondents believe new HR Tech

players might pose a threat in the nearfuture

30

Economic Outlook: WRAP-UP

During the previous years, the world economy has strenghtened, withpositive effects on labour markets and employment rates. However, thisgrowth is divergent among countries and the economic outlook iscautiously optimistic.

As for now, there’s no need to assume that events such as the Brexit, tradetensions and political uncertainty will impair the economy. However, somesignals indicate that there might be a stagnation of the economy in 2019, andvigilance is advised.

The Belgian labour market is challenged by a tightness. This puts our Federgonmembers under pressure, making it harder to fill in vacancies for their clientcompanies. Nonetheless, we observe that the sectors occupied with matching labourmarket demand & supply are performing well.

We believe that this will continue to be the case in 2019, albeit at a noticeably slowerpace.

31

RESEARCH & ECONOMIC AFFAIRS DEPARTMENT

PAUL VERSCHUEREN / JANA MARTENS

Havenlaan 86c/302 - 1000 BrusselAvenue du Port 86c/302 - 1000 BruxellesTel: 02/203 38 03

stat@federgon.be

CONTACT

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