20100512 1625 Global Economic News.

Inventories at U.S. wholesalers rose 0.4% for a third month in March (0.6% in Feb), and sales climbed even more (2.4%), a signal companies will need to step up orders to try to meet demand. Economists forecast wholesale inventories would rise 0.5%. Inventories of metals, computers, electrical goods, lumber and autos all rose. At the current sales pace, wholesalers had enough goods on hand to last 1.13 months, down from 1.16 in February and the least since comparable records began in 1992. (Bloomberg)

The European economy will continue its tenuous recovery this year and next, but European Union policymakers need to address some long-standing problems to ensure fiscal discipline going forward, the International Monetary Fund said Tuesday. In its May outlook for the European economy, the IMF said economic activity in the region will pick up in 2010 and 2011 from depressed levels due to stronger exports and the impact of government stimulus measures. But the pace of growth will be weak: Unemployment is expected to rise, and ongoing problems in the banking sector continue to weigh on credit. (CNNMoney)

Europe still needs economic-support measures as their early withdrawal may jeopardize the recovery, the International Monetary Fund said.

• “Aiming to stabilize public debt in the short run is neither feasible nor desirable, given the risk of a relapse into recession and the magnitude of the required fiscal retrenchment,” the IMF said. (Bloomberg)

European Central Bank President Jean-Claude Trichet is buying time for the euro region as investors speculate on whether the US$1 trillion bailout plan is enough to stop the sovereign debt crisis. Spanish and Portuguese bonds have rebounded as the ECB snapped up government debt, reversing a rout that threatened the nations’ ability to borrow.

• At the same time, the euro fell yesterday and stock indexes pared gains on concern about how indebted countries will cut deficits and access aid if needed. (Bloomberg)

Credit rating agency Moody's cautioned investors that two of the euro zone's hardest hit countries aren't out of the woods just yet. In the last month, Moody's has said several times that debt-strapped Greece and Portugal are under review for future downgrades to their credit ratings. But in a report to investors on Monday, the agency said those downgrades could occur within a month. Both reviews will be decided on within the next four weeks. (CNNMoney)

• Greece's downgrade would probably be more "substantial" than previously indicated, with cuts to the Baa range, or just above junk status, the report said. "This will depend on developments in the Greek economy once the fog of financial panic, supportmobilisation and street demonstrations dissipates," 
• Moody's wrote. "The country's debt is large but not unbearable; however, the required adjustment is obviously very painful, and short-term economic prospects are clearly dismal.
• "Portugal's possible downgrade is less severe than that of Greece, as Moody's said it is considering a one-notch cut to Aa3 from Aa2. Both ratings are so-called investment grade and considered relatively low risk.

China's consumer price index (CPI), the main gauge of inflation, rose 2.8% yoy in April (2.4% in Mar), according to the National Bureau of Statistics (NBS) released yesterday. The April CPI figure was within market expectations of between 2.6% and 3.0%. Food prices jumped 5.9% yoy last month. China's Producer Price Index (PPI) grew 6.8% yoy in April (5.9% in Mar). (Xinhua)

China's retail sales, the main gauge of consumer spending in the world's fastest-growing economy, rose 18.5% yoy to 1.15 trn yuan in April (18.0% in Mar), the National Bureau of Statistics (NBS) said. Urban consumption up 18.9% yoy while rural residents spent rose 16% in April.

• High growth were reported in the catering sector (+17% yoy), commodities retail sales (+18.7%), sales of cars, furniture as well as home appliances and AV equipment (Xinhua)

China's home prices in 70 large and medium-sized cities rose by 12.8% yoy in April (11.7% in Mar), the National Bureau of Statistics said (Xinhua).

Urban fixed asset investment in China for the first four months this year rose 26.1% yoy to 4.67 trn yuan (26.4% in 1Q), according to the National Bureau of Statistics announced Tuesday. The slowdown in investment growth was a result of a higher comparison base during the same period last year. Growth in central government projects investment also slowed. (Xinhua)

China's industrial value-added output growth was 17.8% yoy in April (18.1% in Mar), the National Bureau of Statistics (NBS) announced yesterday. Industrial value-added output rose 19.1% from January to April. (Xinhua)

Australia’s government aims to bring the budget into surplus three years ahead of forecast, seeking a “solid buffer” against a European debt crisis that threatens to undermine the global recovery.

• Treasurer Wayne Swan, releasing the annual budget yesterday, estimated a A$1bn (US$900m) surplus in 2012-13, from a A$40.8bn deficit in the year to 30 Jun 11. He said he’ll keep a 2.0% cap on spending growth until the surplus reaches 1.0% of GDP. (Bloomberg)

New Zealand’s employment is likely to grow between 0.1% and 0.5% in the next two quarters and “slightly more” in 4Q10, the Department of Labour said. (Bloomberg)

China’s bank lending exceeded estimates in April. New yuan loans increased to Rmb774.0bn from Rmb510.7bn from March. Economists had projected it would rise to Rmb585.0bn. (Bloomberg)

Thailand’s cabinet has approved the THB2.07tr 2011 fiscal budget bill proposed by the Ministry of Finance, deputy spokesman Watchara Kannika said. The cabinet also agreed to bring forward the date for the parliamentary budget debate to 24-26 May, from the previously set 26-27 May.

• It was expected that the scrutinising of the 2011 budget bill would take about 125 days. The bill would likely be approved by the House no later than 10 Sep, he said. (Bangkok Post)

Indonesian Finance Minister Sri Mulyani Indrawati said that the government expects the economy will grow by 6.3% in 2011. The assumption is made amid the continuation of global economic recovery, despite concerns that the crisis in Greek may impact emerging markets, including Indonesia, but high amount of global liquidity may neutralize the impact, the minister said.

• Exports are forecast to grow at 10.8% next year, lower than this year's prediction of 15.8% as the country survived from the fallout of the global financial routs. 
• Imports are forecast to grow at 12.1% in 2011.
• Consumption is seen to grow at 5.4% in 2011.
• The unemployment rate is forecast to decrease to 7.0% next year from the current level of 7.3%.
• The other variables, including the assumptions of inflation, oil price and central bank interest rate, will be updated and announced later, she said. (Bloomberg)