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Global recession ends, economists predict recovery in 2010

Top economists from Moody's and the International Monetary Fund say Asia and Latin America will lead the world's economic recovery in 2010, and the United States will mount comeback, too.

By Tracey D. SamuelsonCorrespondent / February 8, 2010

Employees work at the assembly line of Positivo Computers, Brazil's largest computer producer, in Curitiba. Emerging economies such as Brazil's are bouncing back rapidly.

Cesar Ferrari/Reuters

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The world can collectively breathe a huge sigh of relief – the global recession is over.

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Of course, it may not look that way. Especially if you're one of the 15 million Americans still out of work – or if your house is still worth substantially less than your mortgage. But many "emerging" or developing nations are bouncing back rapidly. China, in fact, is again concerned about growing too quickly. And even the more mature economies, such as those of the United States and Europe, are rebounding, albeit more slowly.

Economists say this two-speed recovery will gather strength in 2010, but warn it will be a long, protracted process to recover prerecession conditions.

Is the global recession really over?

"Absolutely," says Ruth Stroppiana, chief international economist at Moody's

And Dominique Strauss-Kahn, the managing director of the International Monetary Fund (IMF), told reporters in Hong Kong recently: "2010 is going to be a crucial year – the first year after the crisis when countries can lift their eyes to the longer-term horizon." He added that this will be "a year of transformation for the world."

Following the financial crisis that swept the world beginning in 2008, the broad consensus of economists and policymakers is that the global economy is again expanding.

China, for example, says its gross domestic product (GDP) jumped 10.7 percent in the last quarter of 2009, compared with the previous year. India's GDP hit 7.9 percent in the third quarter.

Europe and the US are recovering more slowly. The US economy grew 5.7 percent in the fourth quarter, the second consecutive quarter of growth after a full year of decline, though its GDP still contracted 2.4 percent over 2009. Britain's economy, meanwhile, rose just 0.1 percent in the fourth quarter of 2009.

But that doesn't mean the global economy is completely out of the woods. "We are in the recovery phase," explains Simon Johnson, an economist at the Massachusetts Institute of Technology in Cambridge, via e-mail. Countries are stabilizing at different speeds and the global economy is still fragile.

Which countries are recovering fastest?

The global recovery has been primarily driven by emerging markets, as "their financial systems were less damaged by the crisis and they were not overly indebted [prior to the crisis]," says Professor Johnson.

In fact, many emerging markets – China, India, Australia (which saw only one quarter of contraction) – did not actually enter a recession, though their economies did slow.