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