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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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- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
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