The International Monetary Fund has forecast that the world economy will grow at a faster than expected rate of 4.2% this year, though it said the recovery would be patchy.
The IMF said the emerging markets of Brazil, China and India would lead the rebound, as established economic powers in Europe and Japan continued 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 bi-annual report. The IMF had predicted a 3.9% increase in global output in its last estimates in January.
China was forecast to grow 10% this year, India 8.8% and Brazil 5.5%. But the report said the euro zone was heading for 1% growth this year, limping out of recession under the threat of a debt crisis.
France and Germany will enjoy 'moderate' growth but smaller economies such as Greece, Ireland, Portugal and Spain face a longer road out of recession due to big deficits, the IMF said.
The Japanese economy is expected to grow 1.9% this year and the US 3.1% - almost half a more than previously expected. 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 US and other advanced nations faced a delicate balancing act between reigning in deficits and maintaining high levels of government spending to stimulate the economy.
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.
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 per cent interest rates that could damage the recovery.
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 strengthen in order to cool demand.
IMF plans new bank taxes
The International Monetary Fund is reported to be proposing two new global taxes on banks and other financial institutions to cover the cost of future bail-outs.
The BBC reported that the measures would see all institutions pay a bank levy as well as a further tax on profits and pay, which would aim to protect against future financial meltdown.
Governments of the Group of 20 advanced and developing countries - which account for more than 85% of the global economy - received the documents on Tuesday, said the BBC.
Insurers, hedge funds and other financial institutions would also be required to pay the taxes under the IMF proposals, despite the fact they were less implicated in the recent financial crisis.
This was to prevent banks reclassifying activities they currently carry out as other services - such as insurance or hedge-fund services - in an effort to avoid the levy.
The general levy, called the 'financial stability contribution', would start at a flat rate but would eventually be changed so businesses judged to be riskier paid more, said the BBC.
Several proposals have been put forward by different governments to cover the costs of future economic rescue packages, including a tax on financial transactions. But many have been reluctant to unilaterally introduce taxes to pay for future bail-outs, believing co-ordinated action is the only option.
If governments acted alone, it is feared that institutions would simply move their operations to places with less stringent financial regulation.
