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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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Monday, 30 December 19
AUSTRALIAN MINERS HIT BY LOWEST THERMAL COAL PRICE IN MORE THAN A DECADE - THE GUARDIAN
Australian coal exporters have experienced the biggest annual drop in thermal coal prices in more than a decade during 2019, raising doubts about i ...
Monday, 30 December 19
INDIA'S COAL IMPORTS RISE 4% TO 161.43 MT IN APRIL-NOVEMBER 2019 - PTI
The country’s coal imports registered an increase of 4.4 per cent to 161.43 million tonnes (MT) in the April-November period of the ongoing f ...
Sunday, 29 December 19
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Sunday, 29 December 19
IMO 2020 COMPLIANCE: IT'S UP TO US TO BE GOOD CITIZENS - IBIA
One of the concerns around implementation of the 0.50% sulphur limit has been, and continues to be, the need for effective enforcement to ensure a ...
Sunday, 29 December 19
AUSTRALIA SUFFERS WORST OF CHINA'S COAL CURBS AFTER EARLIER BOOM - BLOOMBERG
Australia is bearing the brunt of China’s year-end coal import restrictions, ceding market share to other exporters including Russia and Mong ...
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- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- The University of Queensland
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Australian Coal Association
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
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