Toronto, Sep 3 - The global economy is turning the corner and India and China will lead the world out of recession, said a Canadian economic report Wednesday.

The report called 'Economic Directions' by Scotiabank, the second largest Canadian bank with operations in about 50 countries, said in this new environment emerging markets will provide a large share of 'global locomotion.'

'Even in a year when global output is shrinking by nearly three per cent, China and India are expected to expand by six to eight per cent in 2009,' said Scoitabank chief economist Warren Jestin.

The report said China will be 'at the vanguard of nations starting down the road to recovery, with the US appearing to be in the pole position among major developed countries.'

The Scotiabank chief economist said: 'In the US, massive monetary and fiscal stimulus is beginning to gain traction and will account for the majority of growth during the next year.''

He said, 'Government initiatives are bolstering disposable income and spending at a time when households are focusing on reducing debt and rebuilding savings.

'Monthly job losses appear to have crested and confidence surveys suggest that consumers and businesses are becoming less negative about current conditions and cautiously more optimistic about prospects for the balance of the year.