The head of the International Monetary Fund (IMF) said Tuesday that the global economic recovery was firmly underway, but that stock markets will remain volatile in the coming weeks and months.

speaking in an interview with Reuters, IMF Managing Director Horst Koehler said it would be premature to assume that the recent decline of the Us dollar would continue, saying that economic growth prospects in the United states remain better than those in Europe.

"We think that the recovery is underway, it is particularly underway in the Us and it will gain strength in the second half of this year," Koehler said, noting there remain, "Question

marks about the strength and durability of this recovery."

Koehler declined to say whether the IMF has changed its forecast for global growth of 2.8 per cent for this year and 4.0 per cent next year. He said, however, "If there is a tendency toward reviewing our forecasts then there would be more of a tendency to review it upwards."

While the global economic outlook has improved, Koehler said political uncertainties, notably heightened tensions in the Middle East and the possibility of war between India and Pakistan, have "intensified."

With Us stocks falling heavily -the Dow Jones Industrial Average is down almost 7 per cent in the past 13 weeks and the technology-laden Nasdaq index off almost 13 per cent

-- Koehler said investors should expect choppy times ahead.

"We have to look for some time in the coming weeks and months for volatility in stock markets but we should not be too concerned that this is a kind of steady downward spiral," the IMF chief said.

He said that despite mixed news on corporate earnings, there remained reason for "strong ... optimism" about Us prospects, based on lasting gains in productivity and future gains from technological advances.

And while the Us dollar hit nearly 16-month lows against the euro on Tuesday on mounting tensions in the Middle East and fears of a war between India and Pakistan, he said it was, "Absolutely premature already to put the dollar in the corner

of a steadily declining currency."

"The dollar weakened, but I don't think that we should assume this is a permanent process continuing, this weakness," he said. "It could also recover in the next weeks, this depends a lot on the growth prospects here, which in my view are still better than the growth prospects for Europe and it also depends on political developments all over the world that we cannot predict."

Koehler suggested that the solution to the Us current account deficit was for the United states to boost its savings and for, "The Europeans and the Japanese do more to promote their growth because if growth in Europe and Japan is stronger, then the Us can get out of this current account deficit via stronger exports."