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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, 10 October 14
INDONESIA TO DEVELOP DOWNSTREAM COAL INDUSTRY - JP
The government is planning to launch a program to develop the downstream coal industry to increase the commodity’s added value, an official h ...
Friday, 10 October 14
U.S. PRODUCED 83.2 MMST OF COAL IN SEPTEMBER, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.6 million short tons (mmst) of coal in ...
Thursday, 09 October 14
CAPESIZE MARKET HAS CONTINUED TO SHOW WEAKNESS - FEARNLEYS
Handy
We mentioned last week that after several weeks of rate increase for the Supras, the bigger Panamaxes started to snap up better paying Supr ...
Thursday, 09 October 14
SHIPPING REMAINS CHALLENGED AS GLOBAL GROWTH DISAPPOINTS - BIMCO
The global shipping industry finds no grace from much stronger economic activity going forward, as the global recovery remains fragile and uneven. ...
Wednesday, 08 October 14
CAPES RATE FOR THE W. AUSTRALIA TO CHINA VOYAGE MOVED TO BELOW $8/MT - INTERMODAL
The Dry Bulk market remained under pressure last week, with rates for Capes remaining on the red while those for Panamaxes managed to outperform th ...
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- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Oldendorff Carriers - Singapore
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GMR Energy Limited - India
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
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