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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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Friday, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- PTC India Limited - India
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- VISA Power Limited - India
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
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