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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, 14 January 20
SHIPPING MARKET ANALYSIS - ALLIED SHIPBROKING
Uncertainty in the global geopolitical sphere seems to have not come to an end along with 2019, as 2020 commenced with renewed tensions between the ...
Tuesday, 14 January 20
DRY BULK MARKET: "THIS IS NOT THE END OF COAL" SAYS IEA - BALTIC EXCHANGE
A historic drop in coal-fired electricity generation will not sway global coal demand from its upward trajectory through to 2024, though growth wil ...
Saturday, 11 January 20
ARE YOU 95% CONFIDENT THAT YOUR VERY LOW SULPHUR FUEL IS ON SPEC AND MARPOL COMPLIANT? - GARD
KNOWLEDGE TO ELEVATE
Bunker fuel is a commodity and, like all commodities, is produced and sold according to specifications. Bunkers are usual ...
Saturday, 11 January 20
NEW PRICING COULD SPELL TROUBLE FOR CHINA'S COAL SECTOR - CHINA DIALOGUE
Benchmark coal tariffs have been the foundation of China’s electricity pricing since 2004 but this mechanism was replaced on January 1 with a ...
Saturday, 11 January 20
BALTIC BRIEFING TANKER REPORT - WEEK 2
VLCC
Escalating tensions between the USA and Iran, in addition to a continuing strong market, made for an interesting week, with rates firming ...
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- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Australian Coal Association
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
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