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Wednesday, 15 January 20
PREDICTIONS FOR 2020: 'SLOWBALISATION" IS THE NEW GLOBALISATION - PWC
 Projecting what the future holds is an important exercise for businesses looking to plan ahead. Below we present a summary of some of the themes we assess will likely prevail in the global economy in 2020.
Trading goods across borders will likely remain tense…: A defining feature of the global economy since at least the 1970’s has been globalisation—the bringing together of economies predominantly via more liberal trade flows. The global volume of merchandise traded slowed down dramatically and even went in reverse in 2019 in contrast to a 21st century average growth rate of about 3.4% per annum*. Also, in December 2019 the World Trade Organization’s (“WTO”) dispute settlement mechanism was effectively disbanded. We expect this trend to continue in 2020 and for trade tensions in the global goods market to persist. This means that we assess globalisation is likely give way to ‘slowbalisation’ i.e. continued integration of the global economy via trade, financial and other flows but albeit at a significantly slower pace. Large businesses with sophisticated supply chains spread across the world should therefore plan for a variety of scenarios, some of which have not been experienced in recent history.
…but global services trade expected to hit US$7 trillion: One aspect of trade that is often neglected is trade in services, which is now about one third of the size of the global volume of merchandise trade. In contrast to goods, services remain largely unaffected from tariff wars. The latest 2018 data from the International Trade Centre (“ITC”) shows that the global export of services was worth about US$5.8 trillion, or around 3.5% of global GDP. We expect the total value of services exported to hit a record US$7 trillion by 2020. Assuming historic trends continue, the US and UK are likely to remain the first and second largest exporters of services in the world in US Dollar terms. But in yet another reminder of the shift of the centre of economic power from the West to the East we expect China to overtake France in 2020 and become the world’s fourth largest services exporter.
Global economy is expected to grow at a modest pace: Figure 1 shows that growth in merchandise trade flows and the global economy have been intrinsically linked. In our main scenario for 2020, we expect the global economy to expand at a rate of around 3.2% in purchasing power parity (“PPP”) terms which is below the 21st century average of 3.8% per annum. In our main scenario, we expect all of the major economies to grow, buoyed, in part, by accommodative financial conditions. US economic activity is likely to expand by around 2%, in line with its potential rate. Given the historically low unemployment rate, US employers, however, find it increasingly difficult to hire staff. Across the pond, the Eurozone is expected to grow at approximately half that rate (i.e. around 1%). Germany, and other economies that are sensitive to global trade flows, to become more reliant on household consumption as a source of growth instead of net exports and investment. For Germany, however, this could be challenging as households tend to save more than the European average. In the emerging world, we expect the Chinese economy to expand by less than 6%– but it can still add the equivalent of Saudi Arabia to the world economy in one year. The world’s six other largest emerging economies, including Turkey, should also grow in this scenario, with India leading the way.
Predictions for 2020
More jobs across the board but not necessarily spread equitably
We expect the G7 to continue to create jobs, to the tune of around 2 million. Four out of the five new jobs in the G7 will be created in the US, UK and Japan. As the pool of labour resources in the G7 gradually dries up, we assess earnings should continue their upward trajectory. But in the absence of productivity improvements, corporate profit margins could be squeezed. Similarly, the International Labour Organization (“ILO”) expects the seven largest emerging economies– the E7–to create about 8 million jobs in net terms. There are some exceptions to this– Russia and China are likely to experience a shrinking workforce because of demographic pressures. Finally, the ILO’s employment projections for the G7 show that jobs are likely to be taken up by men and women in equal measure. Within the E7, however, the ILO expects job creations to be less evenly distributed across genders.
India expected to rise in global economic rankings
According to the IMF’s latest estimates, 2019 was the year when India overtook the UK and France to become the fifth largest economy in the world. This is an ongoing process with India likely on current trends to overtake Germany before 2025 and Japan before 2030 to become the world’s largest economy behind China and the US. France and the UK will likely now vie for sixth place in the rankings, with their relative position dependent on the value of the pound against the euro which may remain volatile in 2020.
Germany may need to choose between ‘lower for longer’ interest rates or higher fiscal spending
The US is expected to run a US$1.2 trillion government deficit. The Eurozone, which is about the same size as the US economy will run a government deficit about 1/10 the size of the US. In fact, we expect almost half of the Eurozone member states to run a government budget surplus in 2020. Cyprus, Luxembourg and Germany are expected to run the largest surplus relative to their economic size while France and Italy are expected to be on the opposite end of the spectrum with continuing budget deficits. Germany is likely to come under renewed pressure to either increase its government spending or accept ‘lower for longer’ interest rates (see Figure 3). Further afield, of the Gulf Cooperation Council (“GCC”) countries, we only expect Qatar to run a government surplus in 2020. This could mean more policy action in the future to balance government budgets across the GCC.
US oil production expected to hit record levels
Global renewable energy and nuclear consumption will likely make up more than 20% of global energy consumption, which is the highest it has ever been. The rise of renewable energy reflects how businesses, households and governments are adapting and changing their attitudes. China is expected to be the largest consumer of this type of energy closely followed by Europe. However, oil is expected to continue to remain the most preferred source of energy in 2020 for the world economy followed by coal and natural gas. The US and China will almost certainly remain the largest consumers of oil in the world in 2020. In so far as the extraction and supply of oil (and other liquid forms of energy) is concerned the US may surpass the monthly 13 million barrels per day (“b/d”) threshold. To set into context, in the US crude oil was extracted at a rate of 5.5 million b/d 10 years ago.
Global population biggest it has ever been but also the greyest
According to the United Nations (“UN”), In 2020, the world’s population is expected to reach 7.7 billion, which is around a 10% increase compared to a decade ago. China, India and SubSaharan Africa are expected to drive around half of the world’s annual population increase. At the same time, the number of people above the age of 60 globally is expected to surpass the one billion mark. China is expected to have a larger number of people above the age of 65 than all the six other largest emerging economies put together. This calls into question how policymakers respond to this trend and fund future health and social care. This could also be an opportunity for businesses in advanced economies, who have been dealing with such issues for decades. In relative terms i.e. the proportion of people above the age of 65 relative to the country’s entire population, Japan is expected to remain the ‘greyest’ country in the world and Niger is expected to be the youngest.
Source: PWC
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Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Star Paper Mills Limited - India
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
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