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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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Saturday, 27 September 14
MORE COAL MINERS AGREE TO AMEND CONTRACTS - THE JAKARTA POST
The Energy and Mineral Resources Ministry is in a rush to beat a deadline for the conclusion of numerous memorandums of understanding (MoUs) with t ...
Friday, 26 September 14
INDIA SUPREME COURT RULING TO HIT STEEL, UTILITY EARNINGS, SAYS FITCH
COALspot.com: The 24 September Supreme Court of India (SCI) decision to cancel almost every coal block allocation since 1993 will have a negative f ...
Friday, 26 September 14
U.S WEEKLY COAL PRODUCTION FELL 1.8% WEEK OVER WEEK, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.80 million short tons (mmst) of c ...
Friday, 26 September 14
ORACLE SIGNS EPC FRAMEWORK AGREEMENT WITH SEPCO FOR COAL MINE AND POWER PLANT IN PAKISTAN
COALspot.com: Oracle Coalfields PLC, the UK developer of a lignite coal mine and power plant in the south-eastern Sindh Province, Pakistan, has ann ...
Friday, 26 September 14
NEWCASTLMAXES ARE THE MOST SOUGHT AFTER VESSELS BY SHIP OWNERS TODAY SAYS VESSELS VALUE
KNOWLEDGE TO ELEVATE
Determining a ship’s fair value can be a very tricky business, especially when you’re the one paying. As such ...
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- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Parliament of New Zealand
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
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