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