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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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Sunday, 10 September 23
CHINA AUGUST COAL IMPORTS OF 44.3 MLN T HIT RECORD - REUTERS
China, the world’s top coal consumer, imported 44.3 million metric tons of the fuel last month, customs data showed, the highest amount in an ...
Tuesday, 22 August 23
CHINA'S COAL PRODUCTION LOGS STEADY GROWTH IN JANUARY-JULY: XINHUA
China’s output of raw coal went up 3.6 percent year on year in the first seven months of this year, official data showed.
The ...
Sunday, 13 August 23
THE COMMODITIES FEED: LNG SUPPLY RISKS LINGER - ING
Energy – OPEC sees deficit over remainder of 2023
Oil prices came under some pressure yesterday with ICE Brent settling a litt ...
Wednesday, 09 August 23
COAL TRADE TO RETURN TO 2019 LEVELS - BALTIC EXCHANGE
The International Energy Agency’s mid-year Coal Market Update for 2023 brings both positive and concerning news for the global coal industry. ...
Sunday, 23 July 23
ANALYSIS-INDIA'S COAL MINING BET STUMBLES AS WARY BANKS WEIGH RISING RISKS - REUTERS
India’s drive to ramp up coal output to meet growing energy demand is faltering due to banks’ reluctance to finance newly auctioned min ...
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- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Trasteel International SA, Italy
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- The University of Queensland
- Orica Australia Pty. Ltd.
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
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