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