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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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Friday, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
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