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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, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Australian Coal Association
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Parliament of New Zealand
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- PTC India Limited - India
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
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