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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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Tuesday, 21 January 20
ASIA'S APPETITE FOR COAL GROWS, WITH CHINA THE KEY DECIDER - NIKKEI
Although renewable power generation is expected to rise significantly in Asia, India’s vast electricity needs will still underpin global dema ...
Tuesday, 21 January 20
THERMAL COAL PRICES SET FOR RECOVERY THIS YEAR AS OVERSUPPLY TIGHTENS - REUTERS
Thermal coal prices are expected to recover this year after losing around a third of their value last year as demand from some south-east Asian cou ...
Monday, 20 January 20
INDIA TO STOP SUBSTITUTABLE COAL IMPORT; CAN GO FOR AUCTION OF 100 FULLY EXPLORED NEW BLOCKS: JOSHI - PTI
The Cabinet recently approved promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend Mines and Minerals (Development and Regulation ) Act ...
Monday, 20 January 20
CHINA DECEMBER COAL OUTPUT UP 2.4 PERCENT ON YEAR - STATS BUREAU: REUTERS
China produced 331.74 million tonnes of coal in December, up 2.4 percent on the year, the National Bureau of Statistics said on Friday.
...
Monday, 20 January 20
CHINA IMPORTED 124.4 MLN TONNES OF COAL FROM INDONESIA IN 2019, UP 15.1 PERCENT YOY - BANCHERO COSTA
China's coal imports raced ahead in 2019, surprising many who had expected that in the months of 2019 to come the government would clamp down s ...
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- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- GMR Energy Limited - India
- White Energy Company Limited
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Agrawal Coal Company - India
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Planning Commission, India
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