The global economy will grow at a faster-than-expected rate of 4.2 percent this year, the International Monetary Fund said on Wednesday, heralding the prospect of a rapid, if patchy, recovery.
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The Washington-based fund said the emerging markets of Brazil, China and India will drive the global rebound, as established economic powers in Europe and Japan continue to lag.
"The recovery has been stronger than expected thus far, as confidence has picked up among consumers and businesses as well as in financial markets," the IMF said in a biannual report.
The IMF had predicted 3.9 percent increase in global output in its last estimates in January.
"Many emerging economies have resumed a high rate of growth," the IMF said, noting that the recovery in Europe, Japan and -- to a lesser degree -- the United States, remained in doubt.
"The recovery under way in the major advanced economies will be relatively sluggish, both compared with recoveries following the major (but less deep) recessions of the mid-1970s, early 1980s, and early 1990s and compared with the recoveries forecast for many emerging economies."
Olivier Blanchard, director for the IMF's research department, said that in contrast emerging economies were bettering pre-crisis growth rates.
"If you turn to the emerging market countries then the picture is much better, they have strong growth, very often stronger than even before the crisis. They are making up for time lost."
China was forecast to grow 10 percent this year, India 8.8 percent and Brazil 5.5 percent.
That compares with forecasts of sclerotic growth of around one percent in much of Western Europe and contraction in Spain.
The Japanese economy is expected to grow 1.9 percent this year and the United States 3.1 percent -- almost half a percent point more than previously expected.
"The United States is off to a somewhat later but better start than Europe or Japan," the report said.
But the IMF warned that the US recovery remains constrained by high unemployment and slow bank lending to small and medium-sized companies.
It added that the United States and other advanced nations face a delicate balancing act between reigning in deficits and maintaining high levels of government spending to stimulate the economy.
In the Europe, the IMF said that balancing act had become precarious.
"Several euro area economies that were hit particularly hard or have run out of macroeconomic policy room are likely to lag behind their major peers."
To give themselves more breathing space the IMF said there was an urgent need for advanced economies to address debt levels, or another major shock could result in "a delay of the recovery of several years."
Since the beginning of the crisis, governments have pumped trillions of dollars into their economies to replace collapsed bank lending and slumping consumer spending, swelling debt levels.
"The main concern is that room for policy maneuvers in many advanced economies has either been largely exhausted or has become much more limited, leaving these fragile recoveries exposed to new shocks."
Nowhere has that been more evident than in Greece, which has been brought to the brink of bankruptcy. But concerns linger over the level of debt in other leading economies.
Still, the IMF warned against the rapid withdrawal of stimulus spending or the rapid tightening of near-zero percent interest rates that could damage the recovery.
Since the start of the crisis, many governments have kept interest rates at historic lows in the hope of unblocking gummed-up lending markets as banks have been forced to write down trillions of dollars of assets.
"Extraordinary policy intervention since the crisis has all but eliminated the risk of a second Great Depression," the fund said.
"Given the still-fragile nature of the recovery, the fiscal stimulus planned for 2010 should be fully implemented."
The fund also warned that the rapid recovery in emerging markets could lead to a risk of their recoveries overheating, leading to a cycle of boom and bust.
The IMF said it was "essential for China" to reign in credit growth and allow its currency to appreciate in order to cool demand.
