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Wednesday, 01 October 14
FITCH: GLOBAL ECONOMY FACES MULTI-SPEED RECOVERY, MULTIPLE RISKS
 Fitch Ratings says in its latest Global Economic Outlook (GEO) that global growth will pick up in 2015 and 2016, but risks are weighted to the downside. The contribution of major advanced economies (MAEs) to global expansion will gradually increase, while growth will remain subdued in emerging markets (EMs) after the cyclical trough this year. Fitch’s latest forecasts for world GDP growth (weighted at market exchange rates) are 2.6% in 2014, accelerating to 3% in 2015 and 3.1% 2016.
The 2014 and 2015 forecasts are both 0.1pp lower than in the June GEO. The downward revisions, similar to previous quarters, are mainly due to emerging markets. For the US economy Fitch maintains its forecast of robust GDP growth of 3.1% in 2015 and 3% in 2016, up from 2.2% in 2014. The economy rebounded strongly in 2Q14 after a temporary setback in 1Q14. Private consumption growth is underpinned by improving household income, wealth and confidence.
Investment should be supported by high corporate cash piles and profitability, low financing costs, rising confidence and capacity utilisation. Monetary policy remains highly accommodative and the drag from fiscal consolidation is significantly smaller than it was in 2013. We forecast eurozone GDP growth of 0.9% in 2014, followed by 1.3% in 2015 and 1.5% in 2016, slightly weaker than in the June GEO. Output stagnated in 2Q14 following four quarters of insipid growth, due primarily to a sharp slowdown in Germany.
Over the forecast horizon growth will be supported by the US and UK recoveries, euro depreciation, ECB policy loosening and an easing in the pace of fiscal consolidation. However, faltering recent outturns suggest deleveraging and structural constraints remain formidable headwinds, eroding potential benefits from improving external conditions or policy stimulus. High unemployment will persist and remain above 11% until 2016. Fitch’s base case is for eurozone inflation to be low at 0.5% in 2014, 1% in 2015 and 1.3% in 2016, but for protracted deflation to be avoided. However, current low inflation, weak demand, a decline in market inflation expectations, policy challenges and the potential for self-reinforcing dynamics make deflation a meaningful and rising risk.
We forecast EM growth to slow sharply from 4.7% in 2013 to 4% in 2014, before recovering somewhat in 2015-16. Looming US monetary policy tightening, geo-political tensions and lower commodity prices pose downside risks. Brazil is now in recession and Russia close to it. Fitch expects both to see only a subdued recovery in 2015 and 2016, underperforming most MAEs over the forecast period.
Fitch expects China’s GDP growth to moderate to 7.2% in 2014, 6.8% in 2015 and 6.5% in 2016 as it gradually rebalances while seeking to contain leverage. India will be the only BRIC country where growth picks up in 2014 to 5.6% and accelerates further to 6.5% in 2015 and 2016, owing to an expected improvement in the business environment.
The underlying momentum of the Japanese economy is uncertain after sharper-than-expected contraction in 2Q14. We have revised down GDP growth to 1.4% in 2014, from 1.6% previously, and are maintaining our forecast of 1.3% for 2015 and 2016. Higher wage growth is central to Japan’s prospects of achieving sustainably higher real and nominal GDP growth. Growth in the UK has been strong and broad-based. Fitch is maintaining its forecast that growth will slow from 3% in 2014 to 2.5% in 2015 and 2.3% in 2016, as it moves to its medium-term potential rate of 2%-2.25%.
The base case is that nominal wage growth will pick up as the labour market slack is absorbed and the currently weak productivity growth will improve, in line with previous cyclical recoveries. The coming quarters will see increasing divergence of monetary conditions in MAEs after six years of synchronised, ultra-loose monetary stance.
Fitch expects the Fed and Bank of England to start gradually tightening policy over the next few quarters. Meanwhile, the ECB announced further easing measures at its September meeting and the Bank of Japan is continuing with its qualitative and quantitative easing strategy. The ECB and Bank of Japan are likely to keep interest rates unchanged until at least 2016. This GEO edition’s alternative scenario explores the global impact of a US interest rate shock. In this scenario the Federal Funds rate increases to 5% and the ten-year US yield reaches 6% by end-2016, triggered by an initial inflation shock as the economy runs out of spare capacity much sooner than policy makers and the markets currently expect.
Furthermore volatility spikes in global financial markets and leads to a 150 bps increase in global risk premium. Growth slows sharply in the US from mid-2015 and the economy stagnates in 2016. According to the simulation results the impact on MAEs is limited and stems mainly from lower US demand. Nevertheless the shock raises the risk of a new recession in the eurozone as the baseline recovery is so weak. In many EMs, central banks tighten monetary conditions due to the higher risk premium and inflation, despite the economic slowdown. Russia and Brazil would remain close to recession in 2015 and 2016, while India would slow sharply and China would be the least affected among the BRICs.
Source: Fitch Ratings
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Friday, 06 September 24
REBOUND IN OIL DEMAND COULD LIFT MARKET IN LATTER HALF OF 2024 - BIMCO
Supply/demand
Based on a strong second half demand, the supply/balance is forecast to strengthen in 2024 but weaken slightly in 2025 as n ...
Friday, 06 September 24
GLOBAL SEABORNE LNG TRADE HAS CONTINUED TO INCREASE LAST YEAR - BANCHERO COSTA
Global seaborne LNG trade has continued to increase last year, helped also by the events in Ukraine which forced Europe to diversify away from Russ ...
Wednesday, 28 August 24
SEABORNE COAL IMPORTS INTO INDIA INCREASED BY +9.9% Y-O-Y TO 146.6 MLN T - BANCHERO COSTA
Global coal trade has really picked up pace over the past year, and is now fully back to pre-Covid levels said Banchero Costa Research in its lates ...
Tuesday, 06 August 24
EXERCISE CAUTION WITH AMMONIA SWITCH - BALTIC EXCHANGE
A new study from the Massachusetts Institute of Technology (MIT) has thrown a spanner into the plan to transition ships from diesel fuel to ammonia ...
Friday, 02 August 24
ENERGY MARKET DEVELOPMENTS: COAL AND NATURAL GAS PRICES REACH RECORD HIGHS - WORLD BANK
The recent surge in natural gas and coal prices has been so swift that the main benchmarks were roughly three times higher in 2022Q2 compared to a ...
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- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- The University of Queensland
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Planning Commission, India
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
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