The world economy has come out of 'free fall', offering hope of recovery late this year, a according to a global watchdog.

But the Organisation for Economic Co-operation and Development acknowledged that there was a risk the crisis could yet be prolonged without future fiscal and credit discipline.

Indicators ranging from US house sales to Chinese exports are beginning to pick up, its chief Angel Gurria said.

The 30-nation organisation currently expects member economies to contract by 4.3 per cent this year and 0.1 per cent in 2010.

The US will recover before Europe due to the larger economic stimulus package launched by Washington and the fact that the US financial crisis is at a more advanced stage, Gurria said.

'Green shoots are appearing,' Gurria was quoted as saying in our sister publication, the Gulf Daily News.

Gurria played down the threat of credit rating cuts for large economies such as the Britain and the US. Standard & Poor's lowered its outlook on the UK to negative yesterday, putting at risk Britain's AAA rating.

'It seems absolutely inexplicable that they want to cut the rating of England and that there is talk they are going to cut the rating of the US,' Gurria said.

'The US, England, Greece, Spain and Ireland need to give a bit of help to the ratings agencies to see if they recover their prestige and credibility, to see what the rating agencies are worried about,' he added.

The crisis continues to hit with British Airways, Europe's third-biggest airline, slumping to record losses. – TradeArabia News Service