IMF gloomy about global outlook: Economy roundup

Growing concerns about the health of the US and European economies has prompted the International Monetary Fund to downgrade its forecasts for global economic growth.

Growing concerns about the health of the US and European economies has prompted the International Monetary Fund to downgrade its forecasts for global economic growth.

An official of the IMF has the body cutting its global growth forecast for 2008 from 4.1% to 3.9% and from 3.9% to 3.7% in 2009.

The damage being inflicted on the world’s biggest developed economies by the global credit crunch is a key factor behind the change.

In Australia, the confidence of the resources sector has helped keep business capital investment in thinks like plant and equipment at high levels, despite slower economic conditions this year.

According to the Australian Bureau of Statistics, the capital expenditure by business increased 5.7% seasonally adjusted in the June 2008 quarter, with capex in the mining sector up 8.1%.

Total capex on plant and equipment and buildings for 2007-08 is estimated to have topped $87 billion, a record amount for Australia and an 11.4% increase on the previous year.

More mixed profit results have been announced today. Financial services giant AMP reported a net profit of $366 million for the first half of 2008, 22% down on its result for the corresponding period last year, while gaming firm Aristocrat Leisure did even worse with a 42% drop in first half profit to $77.3 million.

But lotto business Tatts Group shook off the controversy surrounding its loss of the Victorian poker machine license this year to post a $257 million net profit for the 2007-08 financial year, up 11.4% on last year’s result when adjusted for an unusual tax benefit.

On the markets today, at midday the S&P/ASX200 is up 1.1% on yesterday’s close to 5067.4 thanks primarily to buying in materials, mining and property stocks. The Australian dollar is trading at US86.47c.