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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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- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- ASAPP Information Group - India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Anglo American - United Kingdom
- MS Steel International - UAE
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
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