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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, 23 January 20
AFRICAN POWER PLATFORM PUBLISHES REPORTS ON POWER SECTOR FRAMEWORK FOR SELECTED AFRICAN COUNTRIES
Press Release: African Power Platform publishes Reports on Power Sector Framework for selected African Countries
With the repo ...
Thursday, 23 January 20
COAL-BASED ELECTRICITY GENERATION SURGES 95% IN 2019 - PROFIT PAKISTAN TODAY
Coal-based power generation jumped 94.5 percent to 2,030 Gigawatt hours (GWh) in the year to November 2019, taking its share in the country’s ...
Wednesday, 22 January 20
INDIA: COAL PRODUCTION FROM CAPTIVE MINES RAISES 24% OUTPUT IN APRIL TO DECEMBER - FINANCIAL EXPRESS
Coal production from captive mines in the first nine months of the ongoing financial year was up 24% year-on-year (y-o-y) at 40.93 million tonne (M ...
Wednesday, 22 January 20
SHIPPING MARKET INSIGHT - INTERMODAL
It seems that we are finally seeing whitish smoke as far as the trade feud between the US and China is concerned, while following this much anticip ...
Tuesday, 21 January 20
IRON ORE - 5 THINGS TO WATCH IN 2020 - WOOD MACKENZIE
Wood Mackenzie identifies five trends that will impact the iron ore industry.
Slower demand growth (especially in China) and a decen ...
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- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Australian Coal Association
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
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