World economy recovering faster than expected: IMF

The International Monetary Fund (IMF) said the global economy is recovering faster than expected, but that governments should not be hasty in withdrawing the added spending and low interest rates that have helped restore growth.

The positive report card today is likely to feed cautious but widespread relief that, despite a continuing rise in unemployment and worries about credit availability, the downturn has eased and that a 1930s-style depression has been avoided.

According to the twice-yearly World Economic Outlook, the world is poised to grow by 3.1 per cent in 2010 with much of the recovery driven by emerging economies such as China and India. That is up from the 2.5 per cent in the IMF's previous set of estimates.

And for 2009, the IMF now expects a 1.1 per cent decline of global GDP instead of the 1.4 per cent contraction it predicted in July.

But though things may not be as bad as they could have been, the IMF sought to temper any euphoria, especially as unemployment will continue to rise for many months yet.

"The recovery has started in terms of having positive output growth," Olivier Blanchard, the IMF's economic counsellor told The Associated Press in an interview.