Standard & Poor’s

is predicting an end to the recession by the fourth quarter of this year, and positive GDP growth next year of 1.3%.

However, in an investor conference call, Sam Stovall, S&P’s chief investment strategist, said that while recovery is imminent, we’re likely to see another decline in the markets before we get there. The S&P 500 index hit its low on March 9, when it was down 25% year-to-date, and then had a subsequent mini-recovery with a 37% increase, before stalling again this month.

Stovall points to past recoveries from bear markets, where price declines have followed initial bounces. Since 1933, there has been an average of a 14% decline in prices following an initial recovery period, he says. Once the market experiences this correction, Stovall says that it has historically risen by an average of 36% in the following 12 months.

Alec Young, S&P’s international equity strategist, sees the recovery being led by emerging markets in Asia, rather than the United States. He predicts GDP growth in China of 7% in 2009 and 8.1% in 2010. Young also favors countries that provide the commodities to fuel China’s growth, such as Canada and Australia.

However, he also points to potential roadblocks for emerging markets, particularly a slowdown in exports as consumers in developed countries spend less. Almost 40% of GDP in both China and South Korea comes from exports. Other markets are less vulnerable; Brazil, for example, has just 14% of its GDP dependent on exports.

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