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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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Sunday, 26 January 20
SUPRAMAX: THE ASIAN BASIN SAW A 56,000DWT SHIP FIXING DELIVERY SAMARINDA TRIP TO WEST COAST INDIA AT $4,750 - BALTIC BRIEFING
Capesize
The market endured heavy losses throughout the past week, with the Capesize 5TC dropping from $8,352 to $4,772. In the lead up to Chin ...
Sunday, 26 January 20
SHIPPING NEEDS TO PREPARE FOR CORONAVIRUS RESTRICTIONS WARNS HILL DICKINSON
The shipping industry needs to be prepared for potential restrictions in order to prevent the further spread of the ‘Wuhan’ coronavirus ...
Friday, 24 January 20
LOW-SULPHUR FUEL OIL PRICES DROP USD 99 PER MT IN SINGAPORE - BIMCO
Singapore has seen one of the largest drops in the price of Very Low Sulphur Fuel Oil (VLSFO), which peaked on 7 January 2020 at USD 740 per metric ...
Friday, 24 January 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINED FLAT DURING THE PAST WEEK - XINHUA
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of coal prices in north China’s major ports, stood at 553 yuan (about 80.1 U.S. dollars) ...
Thursday, 23 January 20
PANAMAX: ANOTHER DISAPPOINTING WEEK IN BOTH THE ATLANTIC AND THE PACIFIC BASIN - FEARNLEYS
Cape Size
From bad to worse for the biggest ships as prices for low-sulphur fuel oil remain high whilst freight rates deteriorate further. Aver ...
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- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Planning Commission, India
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- The University of Queensland
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- GMR Energy Limited - India
- PTC India Limited - India
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
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