World economic grouping OECD said on Monday the global economy had come out of "free fall," offering hope of incipient recovery late this year to investors and markets unnerved by rising U.S. government debt.

The U.S. dollar fell to a 2009 low as fears grew the United States could find itself at risk of being stripped of its triple-A rating, a move that would have wide implications for global investment already throttled by the crisis. Ratings agency S&P stirred concern on Thursday by suggesting Britain could face such a downgrading.

Organization for Economic Cooperation and Development (OECD) head Angel Gurria, clearly moving to dispel fears around investment ratings, told a Madrid conference: "A rating cut of the United Kingdom would be inexplicable."

He acknowledged there was a risk the crisis, which began last year with a collapse in the U.S. housing market and is now hitting trade and industry throughout the world, could yet be prolonged without fiscal and credit discipline.

"The rate of the slowdown is easing; we're no longer in a free fall," Gurria said. "The (stimulus) packages in Europe aren't as big as in the United States, which is why the States is recovering quicker and the crisis is closer to its end."

Asked if world output could begin to recover by year end Gurria said: "I would say yes, the issue of recovery does not mean that we start to have very clear positive figures but that first the world economy stops contracting."