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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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Monday, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
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