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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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Sunday, 24 August 14
SEA FREIGHT MARKETS STARTING TO LOOK POSITIVE; CAPES DRIVE FREIGHTS HIGHER
COALspot.com: The freight market has strengthen further this week with BDI up 7.19 pct week on week. The BDI was closed at 1,088 points while the B ...
Friday, 22 August 14
INDIAN IRON ORE ROYALTY RISE NOT LIKELY TO HURT STEELMAKERS' MARGINS - FITCH
Fitch Ratings does not expect an increase in India's iron ore royalty rates to have a major impact on the profitability of steel producers in t ...
Friday, 22 August 14
ARBITRATION CLAUSE IN LOU HELD TO REPLACE CHARTERPARTY ARBITRATION CLAUSE
KNOWLEDGE TO ELEVATE
The Claimants had claims for cargo damage against the vessel Owners arising under four bills of lading. The vessel was th ...
Friday, 22 August 14
ICAP ENERGY LAUNCHES GLOBAL COKING COAL DERIVATIVES TRADING
First contract completed and cleared on CME
COALspot.com: ICAP Energy, the energy business of ICAP plc, announces today that it has successful ...
Friday, 22 August 14
U.S WEEKLY COAL PRODUCTION UP 2.4% WEEK OVER WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.60 million short tons (mmst) of coal in ...
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- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- VISA Power Limited - India
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Planning Commission, India
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
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