This year will prove to be a repeat of 2008, when emerging economies, led by China and India, managed to keep global gross domestic product (GDP) growth in positive territory. With one quarter remaining in the year, we believe that China (which accounts for 14 percent of global GDP) and India (6 percent of global GDP) will deliver enough growth to counterbalance weakness in the worlds main developed economies. Note that the so-called BRIC countries (Brazil, Russia, India and China) represent 26 percent of global GDP.

That being said, the latest economic data from China shows that the Chinese economy is growing and that theres little need for the countrys leadership to cut interest rates. Chinas official manufacturing purchasing managers index (PMI) ticked up to 50.9 in August from 50.7 in July, suggesting that although Chinas growth may slow this year, the slowdown wont be as dramatic as many investors expect.

China will deliver GDP growth of about 9 percent this year and will support the rest of Asias economies. South Koreas 27.1 percent year-over-year export growth in August is another indication that Asian economies are on the right track in 2011.

However, if the situation in Europe and the US were to deteriorate further, the Chinese government will be there to support the economy with a proactive fiscal policy. Weve long believed that inflation in China would peak this summer, an outcome that should materialize soon. We expect inflation in China to decline in August and for the trend to continue throughout the remaining months of 2011.

Our base-case scenario calls for 1.5 to 2 percent US GDP growth in 2011. Europe will avoid an economic collapse and deliver positive GDP growth. When alls said and done, we expect global GDP growth to clock in at about 3 percent, falling short of the long-term average of 3.5 percent, but still a relatively strong performance. The reason for our forecast should be well-known to long-term readers of the Global Investment Strategist . Emerging markets represent close to 50 percent of global GDP and remain on a trajectory for solid growth.

Add to this the ongoing loose monetary policies across the globe, unleveraged corporate balance sheets, low global inventory levels and a potential third round of quantitative easing, and another recession seems all the more unlikely. If our forecast plays out as expected, the markets will end the year higher and emerging markets should outperform developed markets.

Its true that global markets remain extremely correlated, rising and falling in lockstep. Although emerging economies are gradually decoupling from developed economies, their markets havent followed suit. This will be the ultimate test for these economies and their markets. Well know the results of this test sooner rather than later.

Nevertheless, emerging markets performed quite well during the latest sell-off. Global equities chalked up their weakest performance between July 22 and Aug. 22. During this period, emerging markets, as represented by the MSCI GEM index, declined by about 16 percent, basically in line with MSCI World index.

In other words, emerging markets managed to hold their own amid a global sell-off triggered by worries in developed economies. Not only is this good news for long-term investors, it also should provide short-term investors with a clear indication of where best to allocate their investment dollars.

For more information about the best global stocks, visit us at the Global Investment Strategist.