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