Bank of America Merrill Lynch Global Research said on Tuesday that 2011 will see modest global economic growth.

In its 2011 Year Ahead outlook, Merrill Lynch Global Research projected that the cyclical bull market in risk assets that began in March 2009 is not yet over, and global economic growth is estimated at about 4 percent in 2011.

The team believed that the key driver of many economic, policy and market stories will produce a large gap in economic performance between developed and emerging economies in 2011.

It estimated that emerging markets will account for over three-quarters of global growth.

Merrill Lynch Global Research also predicted that excess liquidity would translate into higher global equity prices led by the U.S. and emerging markets, modest returns from fixed-income assets, a stronger U.S. dollar and another positive year for commodity prices.

"The world is still healing from the wounds of the economic crisis, so we believe the U.S. economy will muddle through in 2011 and global economic growth will slow modestly compared to 2010," said Ethan Harris, head of Developed Markets Economics.

Michael Hartnett, chief Global Equity strategist and chairman of the Bank of America Merrill Lynch Research Investment Committee, added, "But we also remain bullish on risk assets and believe that global equity prices will rise by more than 15 percent, with the S&P 500 index reaching 1400, roughly 9 percent higher from where it is now."

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