The International Monetary Fund said the sharp decline in the US economy is easing and the economy is expected to recover from the recession by mid 2010.

In its annual report on the world's biggest economy, the IMF projected gross domestic product (GDP) would shrink at an annualized rate of 2.5 percent in 2009, less sharply than the 2.8 percent contraction estimated in April.

Despite the appearance of some positive signs, IMF Managing Director Dominque Strauss-Kahn said officials need to be cautious about overreacting to green shoots because the large part of the worst is not yet behind us.”