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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, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Australian Coal Association
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
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