The global economy is recovering more strongly than expected and the projected growth rate for 2010 is likely to beat the forecast 3 per cent, Dominique Strauss-Kahn, head of the International Monetary Fund, said on Wednesday.

However he said recovery was patchy and different regions were rebounding at varying paces.

While recovery for most advanced economies was likely to remain sluggish and would continue to be dependant on government support, the outlook for emerging economies was considerably better, he said in remarks ahead of a speech to the Asian Financial Forum.

He said recovery was being led by Asia among emerging economies on the resilience of domestic demand, sound economic frameworks and a swift policy response to the crisis.

Growth for Asia, excluding Japan, would exceed 7 per cent in 2010, Strauss-Kahn said.

'This means that many emerging market economies will be able to exit from crisis support measures sooner than advanced economies with monetary tightening generally preceding fiscal tightening,' he said.

Fund flows into Asia, which allayed previous concerns about capital flows reversing, were being driven by the region's fundamentals and a favourable outlook for its economies, he added.

Commenting on the global financial system, he emphasised the need for stronger regulation and supervision and warned that there was a risk the political momentum for reform may be lost and that the sector was going back to its old ways.

'This must not be allowed to happen. We cannot return to the financial system of yesterday,' he said.

Referring to the G-20's request to the IMF to look into the issue of who should bear the costs arising from the financial sector's risky activities, he said a variety of options were being considered.

Financial sector taxes, the creation of resolution funds and the possibility of capital charges were among the alternatives being assessed before the presentation of the initial analysis in April, Strauss-Kahn said. - Reuters