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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, 30 January 20
PRIVATE SECTOR COMPANIES SEEK 'LEVEL PLAYING FIELD' FOR COAL BLOCK AUCTION - PTI
Private sector companies scouting opportunities for commercial coal mining in the country are seeking a “level playing field” to encour ...
Thursday, 30 January 20
CAPE: WITH CHINESE NEW YEAR TAKING PLACE, THE RATES ARE REACHING FURTHER DISAPPOINTING LEVELS - FEARNLEYS
Cape
With Chinese New Year taking place, the rates are reaching further disappointing levels. Present TC average is below USD 4,500, off 24% fr ...
Wednesday, 29 January 20
INDONESIA REMAINS AT THE TOP SPOT IN 2019 AS THE LARGEST SUPPLIER OF COAL TO INDIA WITH 91.3 MLN TONNES - BANCHERO COSTA
Despite repeated promises from India’s government to reduce the country’s coal imports and increase domestic self-reliance, volumes jus ...
Wednesday, 29 January 20
MARKET INSIGHT - INTERMODAL
Last week Libya’s oil production operations were disrupted as it was reported that local Libyan tribes interrupted output at the the El Feel ...
Tuesday, 28 January 20
INDONESIA - UNCERTAINTY OVER AVAILABILITY OF LSFO - THE STANDARD CLUB
The club has received reports that low sulphur fuel is not currently readily available in all Indonesian ports and that there are local shortages.
...
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- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Australian Coal Association
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
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