In the same way that economists rushed to call the recession on the way down, they are now buzzing over when to sound the all-clear. The consensus for now seems to be that growth is still weak, but the plunge is slowing, and recovery will soon be at hand.

RBC Capital Markets says that it, “agrees with the consensus that the global recession began to lose momentum in the second quarter,” but it still expects another round of negative growth rates to be reported. It notes that while global manufacturing indices are still at low levels, they are signalling a turnaround in sentiment, “suggesting that the pace of contraction will be slower in the second quarter and that, if this trend persists, the global economy will likely be expanding in the second half of this year.”

BMO Capital Markets also suggests that the worst may be over: “Signs of improvement in the U.S. housing market, rising consumer confidence and a rally in financial stocks in the U.S. and Canada suggest that the economies are bottoming and the worst of the financial crisis is behind us.”

It adds: “Indeed, the U.S. cut a net 345,000 jobs in May, the smallest loss in eight months. And, stock markets have risen sharply since March 9 as the biggest U.S. banks announced they were profitable in the first quarter. The rally in the S&P 500 above its 200-day average is sending a bullish signal after the index traded below that level for the longest period since the 1930s.”

However, TD Economics points out that while the economic data is increasingly “less bad,” it says it’s important to note that several sectors of the economy remain quite weak. “And as echoed by U.S. Federa Reserve Board chairman Ben Bernanke this week, ‘Even once the recovery gets underway, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while’.”

Nevertheless, TD says it suspects “that we have seen the worst of the recession in Canada. Real economic activity is likely to contract for the next two quarters; however, the rate of decline should moderate. Furthermore, the recent strength seen in commodity prices should bode well for nominal GDP in the second quarter.”

BMO notes that Canada is likely to benefit disproportionately from a global economic rebound. “Commodity price increases boost those sectors and their stock prices. Canadian banks have proven to be far more solid than virtually anywhere in the world. Household balance sheets are in much better shape,” it says. And, it continues to predict that the Canadian economy will begin to grow in the second half of this year.

RBC’s forecast is for the Canadian economy to regain its footing in the third quarter with the second quarter’s projected decline of 3.2% being softer than the first quarter’s drop, it says. For 2009, it expects the recession to reduce real GDP output by 2.5%, followed by a 2.5% increase in 2010.

That’s not to say that the recovery will be painless, or without risk. “Unemployment will remain high for some time, likely peaking in mid-2010. A sustained period of jobless recovery cannot be ruled out, but compared to the last three quarters, it will feel much better,” BMO cautions. The recent rise in the Canadian dollar is also a source of concern.