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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, 07 January 20
BHP EYES INDIA FOR COAL GROWTH AS CHINA DEMAND FLATLINES - SYDNEY MORNING HERALD
Australia’s largest miner, BHP, believes the long-term trajectory of the emerging economy of India and the acceleration of its steelmaking ou ...
Sunday, 05 January 20
BUNKER QUALITY CLAIMS IN 2020 - ISSUES TO CONSIDER - CLYDE&CO
KNOWLEDGE TO ELEVATE
In recent years the shipping industry has faced a significant number of bunker quality claims, most notably ari ...
Saturday, 04 January 20
SUPRAMAX: A 53,000DWT VESSEL FIXING DELIVERY INDONESIA TRIP TO CHINA AT $4,000 AND A 58,000DWT SHIP FIXING DELIVERY EAST KALIMANTAN TRIP TO THAILAND AT $5,500 - BALTIC BRIEFING
Capesize
The New Year started with an erosion on pre-Christmas rates as the higher low sulphur fuel costs due to IMO 2020 affected levels. From ...
Thursday, 02 January 20
DMO 2020 PRICE SET FOR ELECTRICITY SECTOR - IAN WOLLFF
On the 26th December 2019, the Minister of Energy and Mineral Resources (ESDM) issued the decree No. 261.K/30.MEM/2019 about the States needs for c ...
Thursday, 02 January 20
SULPHUR 2020 COMPENDIUM - HOW ARE INDIVIDUAL PORT STATES EXPECTED TO REACT? - STANDARD CLUB
KNOWLEDGE TO ELEVATE
With the new sulphur limits soon to be in force, Standard Club has been investigating the ways in which certain jurisdict ...
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- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
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