World beginning to pull out of recession, IMF says (1st Lead)

Jul 8, 2009, 13:32 GMT

Washington - The world is beginning to pull out of its first recession since World War II, the International Monetary Fund said Wednesday.

In an updated economic forecast, the IMF said the global economy was already stabilizing, the financial crisis has eased and the recession will end in the second half of this year.

The report marked the first time the IMF has sounded a more positive note since the financial crisis struck in October, though the global lender also warned against complacency.

'While the global economy is still in recession, the recovery is coming,' said IMF chief economist Olivier Blanchard.

The world economy will shrink 1.4 per cent this year but grow by 2.5 per cent in 2010, the IMF said. That compares to an April forecast of a 1.3-per-cent contraction in 2009 and growth of 1.9 per cent next year.

But the IMF warned the recovery would be 'uneven' and growth would remain 'sluggish' for much of the next 2 years, especially in wealthy countries where the economic crisis began.

Much of the growth over the next 2 years will come from the emerging world. Wealthy countries will shrink 3.8 per cent this year and grow only 0.6 per cent in 2010, the IMF said. Developing countries will grow 1.5 per cent in 2009 and 4.7 per cent next year.