After contracting by 2.5% in 2009, Canada’s economy is forecast to grow by 2.1% next year, the International Monetary Fund said Thursday.

That’s up considerably from a July forecast by the IMF that pegged Canada’s 2010 growth at 0.5%

“After a deep recession, global economic growth has turned positive,” the IMF said in its semiannual World Economic Outlook on Thursday.

“The recovery is expected to be slow, as financial systems remain impaired and support from public policies will gradually have to be withdrawn.”

Globally, the IMF forecasts the international economy to expand by about 3.1% in 2010 after contracting by about 1.1% in 2009.

“The recovery has started. Financial markets are healing,” IMF chief economist Olivier Blanchard said.

“In most countries, growth will be positive for the rest of the year, as well as in 2010.” But he stressed that, to sustain the recovery, private consumption and investment will have to strengthen as high public spending and large fiscal deficits are unwound.

The rebound is driven by China, India, and a number of other emerging Asian countries, the IMF said.

The IMF forecast is similar to that put out by TD Economics last month, which forecast 2.5% growth for Canada’s economy in 2010, and 3.8% global growth.

It is somewhat more pessimistic than the Bank of Canada’s projection that the Canadian economy will contract by 2.3% in 2009 and then grow by 3.0% in 2010.

The growth will not be evenly distributed, the IMF says. After contracting by an estimated 3.4% in 2009, developed economies will grow by an average of 1.2% in 2010, the IMF said.

But developing economies will expand by 5.1% next year, after growing by an estimated 1.7% in 2009, the agency said.

IE