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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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- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Posco Energy - South Korea
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
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