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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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Wednesday, 21 June 23
CHINA'S MAY COAL IMPORTS FROM AUSTRALIA RECOVER TO PRE-BAN LEVELS - REUTERS
Australian coal sales to China increased in May, as trade resumed between them even as overall coal demand weakened against an uncertain macroecono ...
Monday, 19 June 23
DROUGHT-DEPLETED HYDROPOWER DRIVES CHINA TO TURN TO COAL - REUTERS
China has leant hard on coal-fired power plants as well as wind and solar generators to make up for a shortfall in hydroelectric generation as a re ...
Monday, 19 June 23
CHINA COAL OUTPUT UP 4.2 PCT IN MAY - XINHUA
China’s raw coal output posted steady growth in May, official data showed.
The country produced 390 million tonnes of raw coal ...
Wednesday, 24 May 23
AMMONIA-FUELLED BULK CARRIERS WITHIN FIVE YEARS - BALTIC EXCHANGE
Within five years, ships powered by clean ammonia could be a feature on the iron ore trade routes between West Australia and East Asia.
A study ...
Tuesday, 23 May 23
CHINA'S APRIL COAL OUTPUT LEAPS 11% ON YEAR, BUT DEMAND DOWNTURN LOOMS - REUTERS
China’s daily coal output in April jumped 11% from the same month a year earlier, boosted by Beijing’s order to increase supply to ensu ...
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- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- The University of Queensland
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Australian Coal Association
- India Bulls Power Limited - India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
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