IMF upgrades Australia’s growth outlook: Economy Roundup

The Australian economy will grow at a faster than expected rate during the year ahead, according to the latest International Monetary Fund World Economic Outlook.

The IMF reported the global economy expanded by over 5% in the first quarter of the year, while Australia’s growth will reportedly rise from 3% to 3.5% for the year ahead.

The IMF also upgraded estimates for the US, but warned European debt problems could stunt growth.

“Looking back, say over the first half of the year, numbers about economic activity have come in strong, indeed somewhat stronger than we had forecast,” IMF chief economist, Olivier Blanchard, told The Australian. “These would give reasons to be more optimistic than we were earlier.

“Looking forward however, strong clouds have appeared on the horizon.”

Additionally, the IMF report states demand for emerging economies will increase commodity prices by 15.5% this year. Global growth will come in at 4.6% for the year, up from a previously forecast 4.2%.

Meanwhile, the Australian Securities and Investments Commission will take over the ASX’s supervision duties on 1 August, it announced yesterday.

“ASX is retaining a subsidiary company to fulfil the obligations of each of the licensed entities in the ASX Group to monitor and enforce compliance with the ASX operating rules after the transfer,” the ASX said in a statement.

“Twenty three ASX staff will take up positions at ASIC in conjunction with the transfer of responsibility.”

Oil giant Santos has said it remains in “detailed discussions” with a number of different parties regarding the sale of gas and equity in the Gladstone natural gas project.

“These discussions are incomplete and there is no certainty that definitive agreements will be executed by the parties,” Santos said in a statement to the ASX. Company shares have gained 7.4% this morning to $13.70.

Shares open flat despite Wall Street lead

The Australian sharemarket opened slightly higher this morning due to optimistic data from the International Monetary Fund, but shares have since dropped back into negative territory during the morning.

The benchmark S&P/ASX200 index was down 0.9 points or 0.02% to 4355.9 at 12.10 AEST, while the Australian dollar also dropped back slightly to US86c.

Commonwealth Bank shares gained 0.2% to $49.63, while ANZ shares also rose by 0.2% to $22.19. Westpac lost 0.2% to $21.97 as AMP rose 0.6% to $5.28.

Department store giant David Jones has said it has negotiated with Westfield a plan to terminate its lease at the proposed Fountain Gate shopping centre development.

“Whilst the terms of the Fountain Gate lease arrangements were renegotiated at that time and involved David Jones paying Westfield an amount of $9.8 million, David Jones has continued to seek to exit from this lease and, until now, had not been able to achieve that on acceptable commercial and strategic terms,” the company said in a statement.

“The Westfield Innaloo option ensures David Jones’s dominant presence in northern Perth, which is one of Australia’s fastest growing and high value markets.”

Ansell announced its four global business units have now been created as part of a company review, and it is now searching for acquisitions.

Chief executive Magnus Nicolin said in a statement that its growth strategy now calls for “faster and more focused execution of organic growth plans with an increased emphasis on acquisitions”.
“To support this strategy, four global business units are being established.

The four different regions will each be accountable for sales, trade marketing, customer service and local warehousing.

“Ansell is a strong company and with selective acquisitions, simplified operations and an increased focus on under-developed verticals, fast growing markets, and innovation, we can reach new heights of growth and profitability.”

Internet search giant Google has said it is confident about securing a new license to operate in China.

“We would expect we would get the necessary license,” chief executive Erich Schmidt told Reuters. “We now expect to get renewal.”

Rio Tinto still hesitant on mining tax

Mining giant Rio Tinto has said the company is still hesitant regarding the new mining tax, even though an agreement has been made with the Federal Government.

“While we remain cautious on the outlook, 2010 is shaping up well from Rio Tinto’s perspective,” chief executive Tom Albanese told the Melbourne Mining Club in London. “In the first quarter of this year, most of our operations continued to run flat out.”

In the United States, stocks enjoyed another day of gains after the IMF upgraded the outlook for the American economy. In a statement the fund said growth was set to be 3.3% for 2010 and 2.9% to 2011, but it also warned that unemployment will remain about 9% for the next two years.

“The outlook has improved in tandem with recovery, but remaining household and financial balance sheet weaknesses — along with elevated unemployment — are likely to continue to restrain private spending,” the Fund said.

This data came alongside reports of lower-than-expected jobless claims, sending the Dow Jones Industrial Average up 120.71 points, or 1.20%, to 10,138.99.