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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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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- MS Steel International - UAE
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Planning Commission, India
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- The University of Queensland
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
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