World economy recovering faster than expected: IMF

John Lipsky, the IMF's first deputy managing director, said the greater optimism would be reflected in a January update of the IMF's World Economic Outlook (WEO), a series of global forecasts that were last released in October.

"The year 2010 has opened amid generalised - but tempered - optimism about the global economic and financial outlook," Lipsky said in a posting on the IMF website.

"The improved prospects are evident in economic data, in financial market performance and in the marking up of economic forecasts," he said. "In fact, somewhat more upbeat  expectations no doubt will be reflected in the regular January (WEO) update."

The IMF in October forecast that world economic output would grow by 3.1 percent in 2010, after shrinking by 1.1 percent in 2009. Wealthy nations will gain 1.3 percent, while developing and emerging countries will lead the rebound with 5.1-percent growth in 2010.

Lipsky said there were still reasons for caution as the world comes out of recession, citing high unemployment and fragile financial systems in advanced economies. He urged world governments to keep massive public spending measures in place through 2010.