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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, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- London Commodity Brokers - England
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Australian Coal Association
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
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