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THE WORLD economy has been in free-fall for many months but now shows some tentative signs of stabilising. It may be premature to claim that recovery is either imminent or certain. But there are encouraging signs abroad and, for the first time, some qualified optimism may be justified.

The chairman of the Federal Reserve – America’s central bank – has said again that the US recession is likely to end this year. In testimony to Congress earlier this week, Ben Bernanke cited a recovery in consumer spending and improvement in the housing market as his grounds for optimism. US banks are more willing to lend to each other while consumers, encouraged by record low interest rates, are more willing to spend. Mr Bernanke now expects economic activity to turn up later this year if progress in repairing the financial system continues.