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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, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
Monday, 23 October 23
CHINA SEPT COAL OUTPUT HITS SIX-MONTH HIGH ON RISING POWER DEMAND - REUTERS
China’s September coal output rose 0.4% from August to the highest level since March, official data showed on Wednesday, on rising power dema ...
Monday, 23 October 23
INDIA COAL INVENTORIES DROP AT FASTEST PACE IN TWO YEARS, BOOSTING IMPORTS - REUTERS
Coal inventories at Indian power plants in the first half of October fell at their fastest rate in two years, an analysis of government data showed ...
Tuesday, 19 September 23
LNG SHIPPING STOCKS: THE ASIAN GROWTH UP-INDICES
Last week, the UP World LNG Shipping Index (UPI) gained 3.81 points or 2.51%, closing at 155.85 points. This index tracks the performance of LNG sh ...
Sunday, 10 September 23
GOLDMAN SACHS PREDICTS OIL PRICE TO HIT $100 ON OPEC CUTS - YAHOO FINANCE
Oil supply cuts by Saudi Arabia and Russia could lead to Brent crude jumping as high as $107 a barrel in 2024, Goldman Sachs Commodities Research h ...
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- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Planning Commission, India
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Australian Coal Association
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
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