While the United States, Japan, the euro zone and Britain are still lagging growth in emerging market powerhouses like India and China, they are on a solid path to recovery, according to surveys of over 250 economists taken May 7-13.
Economists say they are confident that a $1 trillion rescue pledge led by the European Union and backed by the International Monetary Fund that was announced on Monday has turned around sentiment and has provided lasting calm to financial markets.
They also say chances are slim that the emergency funds made available to the 16 euro zone members will ever be used, despite widespread concern about staggeringly high debt levels across the developed world even with interest rates at record lows.
"The recovery (is) looking more and more like a 'V' with each passing week," said Ellen Beeson Zentner, US economist at BTMU in New York, echoing a common view that the aggressive stimulus measures put in place by governments and policymakers in the depths of the recession are working.
But the real test will be whether or not the recovery has a life of its own.
"While the first half of 2010 looks to be surprising to the upside, worries over the sustainability of strong growth - (without) government stimulus - in the second half of the year are growing," said Zentner.
Consensus forecasts for first quarter growth in Japan, where usually subdued consumer spending surged, more than doubled.
But some argue that the Greece debt crisis, which has cut the euro's value against the dollar to just above $1.25 from about $1.45 at the start of the year, may delay when policymakers are likely to raise interest rates.
The Reuters poll is still showing a very close call for the first tightening in US monetary policy by the Federal Reserve, tilting slightly toward end-September versus end-year.
The Bank of England and the European Central Bank aren't likely to raise until the first quarter of next year.
Indeed, what is most striking from the latest set of monthly Reuters polls is how little concern economists are showing over the prospect of consumer price inflation given how strong the recovery is shaping up.
Price rises are a much bigger concern in emerging market nations like India - where inflation is running close to 10 percent and food inflation at more than 16 percent. Interest rates are already rising there.
But in the United States, inflation will hold around 2 percent this year according to the poll.
"The deep recession has left the economy with substantial slack," said David Resler, chief economist at Nomura Securities International. "We expect core inflation to fall below 1 percent, justifying a long period of unchanged monetary policy." Even in Britain, where consumer price rises have been larger than in its major trading partners, inflation is still set to average well below 2 percent next year. And Japan's latest bout of deflation looks set to persist as well.
