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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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Saturday, 01 February 20
THERMAL COAL MARKETS: 5 TRENDS TO WATCH OUT FOR IN 2020 - MINING REVIEW
The seaborne thermal coal market entered the year challenged by low priced LNG in the Atlantic and rapidly increasing supply in the Pacific.
&n ...
Saturday, 01 February 20
COAL IS NOT GOING ANYWHERE - MINING REVIEW
The coal sector is living under the constant threat of being blamed by environmentalists as being responsible for a world disaster called global wa ...
Saturday, 01 February 20
CIL PRODUCTION TO NOT EXCEED 640 MILLION TON IN FY20: OFFICIAL - PTI
Hit by disruptions due to a prolonged monsoon, mining major Coal India Ltd’s production in the current fiscal will not exceed 640 million ton ...
Saturday, 01 February 20
WHO PAYS FOR IMO 2020? - FREIGHT WAVES
The United Nations’ International Maritime Organization (IMO) implemented its low-sulfur fuel mandate on January 1, 2020. Full enforcement be ...
Friday, 31 January 20
EIA EXPECTS U.S. ELECTRICITY GENERATION FROM RENEWABLES TO SOON SURPASS NUCLEAR AND COAL
In the latest long-term projections, the U.S Energy Information Administration (EIA) projects electricity generation from renewable sources such as ...
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- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
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