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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, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Planning Commission, India
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
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