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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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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- MS Steel International - UAE
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Parliament of New Zealand
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- VISA Power Limited - India
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Planning Commission, India
- Meralco Power Generation, Philippines
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