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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Planning Commission, India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- PTC India Limited - India
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
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