Last week the IMF lowered its 2012 growth forecast, saying it now expects global growth to slow to 3.3%, down from its earlier view of 3.5%. This year is now on track to lag 2011’s growth of 3.8%, and it will remain far below 2010’s robust growth of 5.1%.

The outlook for 2013 isn’t much better with expectations that growth will be flat or lower in most developed countries.

These sobering forecasts are reinforcing my view that investors should consider being overweight emerging market stocks. [Emerging Market ETFs]

Let’s look at the United States. The U.S. economy is expected to grow by about 2% next year, assuming that the government can avoid the fiscal cliff. But as I’ve said, from conversations we’ve had with politicians, there’s better than a 50/50 chance the United States will go off the fiscal cliff. If that happens, and the tax hikes and spending cuts scheduled to take effect in January actually hit, there is a strong likelihood that the United States would suffer at least a mild recession.

Outside of the United States, European growth is likely to be flat, with modest growth in Germany and perhaps France, but the rest of the continent still contracting. Growth in Japan is expected to decelerate to around 1%.

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