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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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Saturday, 11 January 20
SUPRAMAX: INDONESIA COAL RUNS, A 58,000DWT SHIP WAS RUMOURED FIXED DELIVERY KALIMANTAN, REDELIVERY WEST COAST INDIA, IN THE $4,000S - BALTIC BRIEFING
Capesize
Closing out the first full trading week of 2020, the Capesize market is struggling to gain any solid positive upward traction. Opening ...
Friday, 10 January 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remains flat
China’s benchmark power coal price remained flat during the past week.
...
Thursday, 09 January 20
NEW IMO LIFEBOAT REQUIREMENTS ENTER INTO FORCE - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Three new compulsory IMO resolutions entered into force on 1 January 2020. These resolutions deal with the maintenance, t ...
Thursday, 09 January 20
INDIA'S NEW EASED MINING RULES TO ENHANCE FOREIGN PARTICIPATION IN COAL SECTOR: MINISTER
India’s cabinet has eased mining laws in a bid to attract foreign players to the domestic coal sector and reduce imports of the fuel, coal mi ...
Thursday, 09 January 20
SUPRAMAX: A NUMBER OF INDONESIAN ROUND TRIPS WERE REPORTED AT BELLOW USD 5,000 PD LEVELS - FEARNLEYS
Capesize
The Capesize market has hit new low's in the first week of the new year, with the West Australia route being fixed at USD 6.6 being ...
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- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- PTC India Limited - India
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
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