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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, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
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- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Thai Mozambique Logistica
- VISA Power Limited - India
- Sical Logistics Limited - India
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Australian Coal Association
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
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