International Monetary Fund managing director Michel Camdessus has proclaimed the worst of the economic crisis in Asia is over and that signs of recovery in countries at the centre of the turmoil are beginning to emerge. He said yesterday that even Japan, which had faced a year of 'catastrophe' this year, would see an upturn in the second half of next year. In an upbeat message delivered in an interview on French radio in Paris, he said the strict IMF reform programmes implemented in Thailand, South Korea, Indonesia and Malaysia had begun to show signs of progress. 'I think the worst is past. We can only deal with the problems of employment with sound financial grounding, and in those countries where the financial basics - balance of payments, inflation . . . foreign exchange reserves - are established. 'I am confident in the growth in those countries and I think that from 2000 or 2001 they will start to grow again on grounds more healthy and more lasting than in the past.' He also believed Japan would eventually take permanent steps to reform its crippled banking system, despite the collapse of the latest deal after opposition and government politicians failed to agree on how best to bail out the sector. 'We think at the International Monetary Fund that while this year will be catastrophic - a year of economic contraction of 2.5 per cent - next year, in the second half of the year, should be the start of the recovery.' His comments come days ahead of the IMF's release of its World Economic Outlook report, which will make key forecasts for growth in leading economies. Yesterday, Mr Camdessus predicted that world growth this year would slow to 2 per cent and that next year's growth would only be slightly higher. 'For 1998, we think [growth] will be around 2 per cent. We think it could be a very little bit better. 'Europe should grow maybe a little slower than this year but let us say between 2 and 3 per cent.' He said the rest of the world was now relying on Europe and the US to be the engine for growth in the global economy. 'We are in a world in which the two largest economic powers, the United States and Europe, are doing well, while the rest of the world is doing badly, so [it is important] Europe and the United States manage their affairs well,' he said. 'It is good that the Europeans try to make their interest rates converge as low as possible, that is at the levels currently in France and Germany, I think they must continue their efforts to introduce more flexibility into their economies, because that is the way for these economies to grow faster.' Earlier this week, the European Central Bank president, Wim Duisenberg, predicted that European interest rates would converge at core country rates of about 3.3 per cent in the remaining days before the introduction of the European single currency. Mr Camdessus also pledged to help Russia, but only on the condition that Moscow came forward with a credible reform package. 'On the day that [Russian Prime Minister] Mr [Yevgeny] Primakov comes to us and says 'this is what I want to do', if the plan is credible, we will support it. 'We have created the foundations of a market economy and the country knows it can live without inflation, and it was on the verge of an economic rebound.' The IMF wants broadly to see a re-establishment of the rouble, a re-enactment of the budget on credible foundations and Russia dealing with creditors in a 'civilised' way. 'That is not by imposing confiscatory solutions but rather negotiating a debt rescheduling. If they do all that, we will certainly be ready to help them.'