* IMF says world economy to rebound by 3.1 pct in 2010
* IMF says global recession ending, recovery will be slow
* Emerging economies ahead in the recovery, China leads
By Lesley Wroughton
ISTANBUL, Oct 1 (Reuters) - The world economy is finally stirring from a deep recession led by a swift turnaround in Asia, the International Monetary Fund said on Thursday, raising its forecast for global economic growth next year.
After a year of being downbeat about prospects for the world economy, the IMF's latest World Economic Outlook declared the global recession is ending.
"The global economy appears to be expanding again, pulled up by the strong performance of Asian economies, and stabilization or modest recovery elsewhere," the IMF said.
The Fund said it now expects the world economy to contract by 1.1 percent in 2009 before growing by 3.1 percent in 2010. This is more upbeat than its last update in July when the Fund projected the world economy would shrink 1.4 percent in 2009, before expanding 2.5 percent in 2010.
Over the four years starting at the end of 2010, global growth is expected to average a little more than 4 percent a year, below the 5 percent growth rates before the financial crisis erupted, the IMF report said.
While advanced economies will contract this year, they will begin a fragile recovery in 2010, the report said. Both the United States and euro-area will post growth, albeit at a tepid pace, next year, it added.
Spain will be the only euro-area member whose economy will contract next year, the IMF said, adding that the pace of the economic decline in Europe has started to moderate.
In contrast, emerging and developing economies are further ahead in the recovery and will expand by 1.5 percent this year before rebounding 5 percent next year led by China and India, it said, also noting signs of stabilization in Latin America.
The IMF revised up China's growth forecast for next year to 9 percent from a July estimate of 8.5 percent.
The Fund said the recovery in eastern Europe, which was hardest hit by the financial crisis, will lag other emerging economies, especially the Baltic nations Latvia, Lithuania and Estonia.
Poverty could increase significantly in several developing countries where gross domestic product per capital is contracting in 2009 for the first time in a decade, the report said.
Still, the IMF cautioned that the pace of the overall global recovery is expected to be sluggish for quite some time and the biggest risk is if governments withdraw their support too soon, causing the recovery to stall.
It urged policymakers not to disrupt the recovery by relaxing efforts to strengthen the financial sector and by prematurely withdrawing expansionary economic policies.
It said governments should stand ready to roll out new initiatives if risks to growth materialize. At the same time, governments should also commit to large reductions in deficits once the recovery is on more solid footing.
In major economies, authorities can still afford to maintain accommodative conditions for a while because inflation is likely to remain subdued, the IMF said.
The challenge going forward is to map a middle course between unwinding stimulus measures too early and leaving them there too long, which could damage government balance sheets.
In emerging markets, raising interest rates could happen sooner than in advanced economies, the IMF said, also warning that in some countries warding off risks of new asset price bubbles may require greater exchange rate flexibility.
The IMF report did not specifically name China, but on Wednesday Director for the IMF's Monetary and Capital Markets Division, Jose Vinals, said there was a risk that the rapid credit growth in China could lead to some excesses and asset price bubbles. (Reporting by Lesley Wroughton; Editing by Neil Fullick)