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Wednesday, 01 October 14
FITCH: GLOBAL ECONOMY FACES MULTI-SPEED RECOVERY, MULTIPLE RISKS
 Fitch Ratings says in its latest Global Economic Outlook (GEO) that global growth will pick up in 2015 and 2016, but risks are weighted to the downside. The contribution of major advanced economies (MAEs) to global expansion will gradually increase, while growth will remain subdued in emerging markets (EMs) after the cyclical trough this year. Fitch’s latest forecasts for world GDP growth (weighted at market exchange rates) are 2.6% in 2014, accelerating to 3% in 2015 and 3.1% 2016.
The 2014 and 2015 forecasts are both 0.1pp lower than in the June GEO. The downward revisions, similar to previous quarters, are mainly due to emerging markets. For the US economy Fitch maintains its forecast of robust GDP growth of 3.1% in 2015 and 3% in 2016, up from 2.2% in 2014. The economy rebounded strongly in 2Q14 after a temporary setback in 1Q14. Private consumption growth is underpinned by improving household income, wealth and confidence.
Investment should be supported by high corporate cash piles and profitability, low financing costs, rising confidence and capacity utilisation. Monetary policy remains highly accommodative and the drag from fiscal consolidation is significantly smaller than it was in 2013. We forecast eurozone GDP growth of 0.9% in 2014, followed by 1.3% in 2015 and 1.5% in 2016, slightly weaker than in the June GEO. Output stagnated in 2Q14 following four quarters of insipid growth, due primarily to a sharp slowdown in Germany.
Over the forecast horizon growth will be supported by the US and UK recoveries, euro depreciation, ECB policy loosening and an easing in the pace of fiscal consolidation. However, faltering recent outturns suggest deleveraging and structural constraints remain formidable headwinds, eroding potential benefits from improving external conditions or policy stimulus. High unemployment will persist and remain above 11% until 2016. Fitch’s base case is for eurozone inflation to be low at 0.5% in 2014, 1% in 2015 and 1.3% in 2016, but for protracted deflation to be avoided. However, current low inflation, weak demand, a decline in market inflation expectations, policy challenges and the potential for self-reinforcing dynamics make deflation a meaningful and rising risk.
We forecast EM growth to slow sharply from 4.7% in 2013 to 4% in 2014, before recovering somewhat in 2015-16. Looming US monetary policy tightening, geo-political tensions and lower commodity prices pose downside risks. Brazil is now in recession and Russia close to it. Fitch expects both to see only a subdued recovery in 2015 and 2016, underperforming most MAEs over the forecast period.
Fitch expects China’s GDP growth to moderate to 7.2% in 2014, 6.8% in 2015 and 6.5% in 2016 as it gradually rebalances while seeking to contain leverage. India will be the only BRIC country where growth picks up in 2014 to 5.6% and accelerates further to 6.5% in 2015 and 2016, owing to an expected improvement in the business environment.
The underlying momentum of the Japanese economy is uncertain after sharper-than-expected contraction in 2Q14. We have revised down GDP growth to 1.4% in 2014, from 1.6% previously, and are maintaining our forecast of 1.3% for 2015 and 2016. Higher wage growth is central to Japan’s prospects of achieving sustainably higher real and nominal GDP growth. Growth in the UK has been strong and broad-based. Fitch is maintaining its forecast that growth will slow from 3% in 2014 to 2.5% in 2015 and 2.3% in 2016, as it moves to its medium-term potential rate of 2%-2.25%.
The base case is that nominal wage growth will pick up as the labour market slack is absorbed and the currently weak productivity growth will improve, in line with previous cyclical recoveries. The coming quarters will see increasing divergence of monetary conditions in MAEs after six years of synchronised, ultra-loose monetary stance.
Fitch expects the Fed and Bank of England to start gradually tightening policy over the next few quarters. Meanwhile, the ECB announced further easing measures at its September meeting and the Bank of Japan is continuing with its qualitative and quantitative easing strategy. The ECB and Bank of Japan are likely to keep interest rates unchanged until at least 2016. This GEO edition’s alternative scenario explores the global impact of a US interest rate shock. In this scenario the Federal Funds rate increases to 5% and the ten-year US yield reaches 6% by end-2016, triggered by an initial inflation shock as the economy runs out of spare capacity much sooner than policy makers and the markets currently expect.
Furthermore volatility spikes in global financial markets and leads to a 150 bps increase in global risk premium. Growth slows sharply in the US from mid-2015 and the economy stagnates in 2016. According to the simulation results the impact on MAEs is limited and stems mainly from lower US demand. Nevertheless the shock raises the risk of a new recession in the eurozone as the baseline recovery is so weak. In many EMs, central banks tighten monetary conditions due to the higher risk premium and inflation, despite the economic slowdown. Russia and Brazil would remain close to recession in 2015 and 2016, while India would slow sharply and China would be the least affected among the BRICs.
Source: Fitch Ratings
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Wednesday, 22 October 14
CAPESIZE MARKET REMAINED UNDER PRESSURE
COALspot.com: The Dry Bulk market closed on the red for yet another week although following Friday sentiment has started to improve on the back of ...
Tuesday, 21 October 14
INDIA'S DIESEL DEREGULATION POSITIVE FOR OIL COMPANIES - FITCH
The Indian government's 18 October decision to deregulate diesel prices will have a positive effect on the national oil marketing companies tha ...
Tuesday, 21 October 14
LOW DEMAND PUTTING COAL SWAPS UNDER PRESSURE
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 lost on day, week and month.
The swap has lost US$ 1.57 (-3.04%) month on month ...
Monday, 20 October 14
CHINA'S ENVIRONMENTAL POLICIES DO NOT SPELL THE END FOR COAL - WOOD MACKENZIE
China's environmental policies do not spell the end for coal Analysis across energy commodities show coal still accounting for 64% of power mix ...
Monday, 20 October 14
CFR SOUTH CHINA COAL SWAPS FAILED TO PERFORM POSITIVE
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 3.04 (-4.57%) month over month and US$ 1.75 (-2.68%) week o ...
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- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Planning Commission, India
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
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