IMF raises growth forecast

The International Monetary Fund is relatively optimistic about the world economy. From Reuters:

The global economy is set for another year of strong growth, the International Monetary Fund said on Thursday, but it warned that rising inflationary pressures and a U.S. economic downturn posed growing dangers.

In its twice-yearly World Economic Outlook, the IMF raised its 2006 forecast for global growth to 5.1 percent from an April forecast of 4.9 percent. It also predicted 4.9 percent growth in 2007 versus a previous projection of 4.7 percent.

Market perception of the threat from inflation appeared to have gone up a bit relative to that from a downturn after yesterday's economic data. Again from Reuters:

U.S. consumers spent at a stronger-than-expected pace in August and import prices rose steadily, according to government reports on Thursday that hinted the economy may not be slowing quickly enough to curb inflation pressures.

Retail sales rose 0.2 percent, the Commerce Department said, as lower gasoline prices spurred spending in areas like automobiles and school-related purchases...

Excluding sales of motor vehicles and parts, retail sales also rose by 0.2 percent in August, just below the 0.3 percent rise forecast by analysts. However, the July ex-autos sales were revised downward to a 0.6 percent gain from an originally reported 1.0 percent surge, suggesting the overall spending trend may be softer than the headline numbers indicate...

Excluding gasoline and motor vehicles, retail sales rose 0.4 percent in August after a 0.5 percent rise in July...

In a separate report, the Labor Department said U.S. import prices rose by a more-than-expected 0.8 percent in August, and the cost of nonpetroleum imports climbed 0.5 percent...

Another Labor Department showed new claims for U.S. state jobless aid unexpectedly fell by 5,000 last week to 308,000, compared with an upwardly revised 313,000 the prior week...

And business inventories...rose a slightly more than expected 0.6 percent in July after an upwardly revised 0.9 percent rise in June. The inventories-to-sales ratio, a measure of how long it would take to deplete stocks at the current sales pace, was unchanged at a lean 1.26 months.

Reuters also reports that retail sales rose in the UK as well in August.

The Office for National Statistics said sales rose 0.3 percent in August, putting them up 4.3 percent on the year. July's figure was revised higher to show sales were flat on the month, after an initially reported decline of 0.3 percent.