The International Monetary Fund has raised its forecast for world economic growth this year to 3.9%. Its previous estimate, given four months ago, was for 3.1% growth.
The IMF said a sluggish recovery in more advanced economies would be offset by 'relatively vigorous' growth in emerging and developing economies.
'The global recovery is off to a stronger start than anticipated earlier but is proceeding at different speeds in the various regions,' the IMF said in an update of its October World Economic Outlook report.
But the fund's separate Global Financial Stability Report warned that banks may need to raise a 'substantial' amount of extra capital to support a recovery in lending and wider economic growth.
The IMF said strains on the financial system had eased since its last report in October, but it warned that the 'repair' of the financial system was far from complete, and financial stability remained fragile.
US, euro zone growth forecasts raised
The economic update said that the US, the world's largest economy, was expected to post growth of 2.7% in 2010, a sharp increase from the previous 1.5% forecast, while euro zone growth was lifted from 0.3% to 1%.
China, the emerging market leader and massive engine of the global recovery, will see growth accelerate to 10% this year, a full percentage point higher than previously estimated.
The IMF held unchanged its growth forecast for Japan, saying the world's second-largest economy would expand at 1.7%.
Global production and trade bounced back in the second half of 2009, and 'confidence rebounded strongly on both the financial and real fronts, as extraordinary policy support forestalled another Great Depression,' the Washington-based institution said.
An 'extraordinary' amount of policy stimulus was driving the global recovery, the IMF said, noting there were still few signs that private demand not stimulated by governments was taking hold, at least in advanced economies.
