The International Monetary Fund projects a global recession can still be averted if financial markets stabilize and U.S. housing markets bottom out in 2009.

The financial crisis that began in U.S. housing markets has the world teetering on "the cusp of a global recession," according to a top IMF official.

But IMF Managing Director Dominique Strauss-Kahn said today that if countries act together, a slow economic recovery should begin in the second half of 2009.

Strauss-Kahn said the need for recapitalization was "well understood on both sides of the Atlantic" but cooperation was less evident. He urged European countries to work together to draw up national plans that provide liquidity from central banks, contain guarantees to depositors and assurances to creditors, and that recapitalize financial institutions.

In their latest World Economic Outlook, IMF economists this week called prospects for the global economy "exceptionally uncertain," with a growing chance of recession in many countries.

Global economic growth is expected to slow from 5 percent in 2007 to 3.9 percent in 2008 and 3 percent in 2009, the slowest pace since 2002.

The IMF projects that the economies of advanced nations will be "in or close to recession in the second half of 2008 and early 2009, and the anticipated recovery later in 2009 will be exceptionally gradual by past standards."

The U.S. housing sector is expected to finally reach bottom in 2009, "ending the intense drag on growth that has been present since 2006," the IMF projected.

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