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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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Saturday, 18 March 23
HEDGE TO OFFSET LNG VOLATILITY, TRADERS TOLD - BALTIC EXCHANGE
A shift in imports from Asia to Europe led to significant volatility in liquefied natural gas shipping last year, prompting industry experts to urg ...
Friday, 17 March 23
INDONESIAN COAL PRICE REFERENCE UP AROUND 2.17% IN MARCH 2023
COALspot.com: Indonesian Coal Price Reference up around 2.17% in March 2023.
According to the new HBA regulation No. 41.K/MB.0 ...
Saturday, 11 March 23
MARKET INSIGHT - INTERMODAL
Uncertainty over the recovery of Chinese demand, demand destruction in Europe, as well as weather conditions will pivot the LNG market this summer. ...
Wednesday, 08 March 23
INDONESIAN COAL REFERENCE PRICE FORMULA HAS OFFICIALLY CHANGED
Indonesian Minister of Energy and Mineral Resources has officially changed the guideline for determining the benchmark price for the sale of coal c ...
Thursday, 02 March 23
INDIA'S SEABORNE CRUDE OIL IMPORTS IN 2022 INCREASED BY 11.5% YOY - BANCHERO COSTA
2022 has turned out to be a very positive year for crude oil trade, despite the surging oil prices and risks of economic recession, Banchero Costa ...
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- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Australian Coal Association
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
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