IMF to raise global forecasts: Economy roundup

The International Monetary Fund has said it will likely raise forecasts for global economic growth in the next few weeks, but serious problems must still be overcome.

“After two quarters of sharp contraction, signs are emerging that the rate of decline in global output is moderating,” IMF first deputy managing director John Lipsky told a conference organised by the Paris Club.

“In the upcoming weeks, we will be updating our global growth forecasts and will likely revise modestly upward our projections, particularly for 2010.”

Lipsky said problems relating to access to finance and weak export demand still remain, and that recovery in advanced economies will help lead global recovery. “Modest recovery” is likely to occur in Asia this year, he said.

The country’s largest refiner, Caltex, has said its first-half profit may rise as much as 50% due to higher margins on crude and exchange rates. It now expects a first-half profit of up to $295 million on a replacement ‘cost of sales’ basis, an increase from $196 million from the same period a year ago.

But the company said its after tax profit for the six months ending 30 June will be between $270 million and $295 million, down from last year’s $196 million in profit.

“With expected growth in global surplus refinery capacity, refiner margins are expected to come under pressure in the second half of 2009,” Caltex said in a statement to the ASX.

“The outcome will depend on the rate and timing of product demand recovery, and the continued moderation of capacity utilisation by refiners globally as they rationally respond to soft demand with lower utilisation rates.

“Given the weaker outlook for the second half of 2009, the uncertainty in relation to the financial climate generally and also taking in to account the financial obligations arising from the proposed acquisition of Mobil’s retail business, the board intends to take a conservative position on the 2009 interim dividend.”

The Australian share market has opened higher today after positive leads from Wall Street overnight, due to news Federal Reserve chairman Ben Bernanke successfully answered a number of questions from Congress regarding the Bank of America-Merrill Lynch deal.

The benchmark S&P/ASX200 index was up 50 points or 1.3% to 3906 at 12.10pm AEST. The Australian dollar has also opened higher to US80 cents.

NAB shares rose 2.6% to $22.06, while ANZ gained 1.4% to $16.28. Westpac gained 1.6% to $19.82 as Commonwealth Bank gained 2.3% to $38.40.

Overseas, Wall Street posted gains due to the relief from investors about Bernanke’s testimony to Congress.

The Fed chairman was questioned by the US House of Representatives Oversight and Government Reform Committee about whether the Federal Reserve had pressured Bank of America chief executive Ken Lewis to go through with the deal. The Dow Jones Industrial Average jumped 172.54 points, or 2.08%, to 8472.40.

Back home, Boral has said its managing director Rod Pearse will now retire at the end of the year after 10 years in his job.

“It has been widely known that my second five-year contract comes to an end in December,” Pearse said at a business dinner last night.

“It is also well known that I will be turning 63 in a few months. So, a number of you would have figured out that it’s the right time for me to move on to other things.”

Pearse’s five-year contract was due to expire on 31 December.

The Australian Securities and Investments Commission will investigate the possibility of insolvent trading in Queensland-based Kleenmaid, after the company went into liquidation on 25 May while owing more than $80 million to creditors.

Some of the company’s customers have said Kleenmaid was taking cash for products in the week before it was placed into the hands of Deloitte, its current administrators.

“The forms are in and the reality is that we’ve been in consultation with ASIC for some time over this, so it should help to speed up the process,” a Deloitte spokesperson told AAP.

Meanwhile, Qantas has canceled orders for 15 Boeing 787-9 aircraft in a move to reduce spending by $3.7 billion over the next few years. It has also delayed the delivery of a batch of 15 787 aircraft by a further four years.

The decision will delay Asian expansion plans of its discount subsidiary Jetstar.