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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, 06 September 24
REBOUND IN OIL DEMAND COULD LIFT MARKET IN LATTER HALF OF 2024 - BIMCO
Supply/demand
Based on a strong second half demand, the supply/balance is forecast to strengthen in 2024 but weaken slightly in 2025 as n ...
Friday, 06 September 24
GLOBAL SEABORNE LNG TRADE HAS CONTINUED TO INCREASE LAST YEAR - BANCHERO COSTA
Global seaborne LNG trade has continued to increase last year, helped also by the events in Ukraine which forced Europe to diversify away from Russ ...
Wednesday, 28 August 24
SEABORNE COAL IMPORTS INTO INDIA INCREASED BY +9.9% Y-O-Y TO 146.6 MLN T - BANCHERO COSTA
Global coal trade has really picked up pace over the past year, and is now fully back to pre-Covid levels said Banchero Costa Research in its lates ...
Tuesday, 06 August 24
EXERCISE CAUTION WITH AMMONIA SWITCH - BALTIC EXCHANGE
A new study from the Massachusetts Institute of Technology (MIT) has thrown a spanner into the plan to transition ships from diesel fuel to ammonia ...
Friday, 02 August 24
ENERGY MARKET DEVELOPMENTS: COAL AND NATURAL GAS PRICES REACH RECORD HIGHS - WORLD BANK
The recent surge in natural gas and coal prices has been so swift that the main benchmarks were roughly three times higher in 2022Q2 compared to a ...
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- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Australian Coal Association
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Planning Commission, India
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
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