By contrast, South America's largest economy is booming thanks to an abundance of natural resources and fast growing exports to China and the rest of the Far East. Foreign investors are also attracted by Brazil's political stability.
The US, China, Japan, Germany and France remain in the top five places. Traditionally known for top-class football, its favelas and carnival, Brazil is rapidly becoming an economic powerhouse along with the other BRIC economies. Europe, which remains embroiled in a sovereign debt crisis with no end in sight, is gearing up for a "lost decade" of economic stagnation or low growth.
CEBR chief executive Douglas McWilliams said: "Brazil has beaten the European countries at soccer for a long time, but beating them at economics is a new phenomenon. Our world economic league table shows how the economic map is changing, with Asian countries and commodity-producing economies climbing up the league while we in Europe fall back."
Other Asian economies also move up the ranking. Thailand is expected to move up seven places from No 32 to No 25; Taiwan from 24th to 18th place and Korea from 15th to 12th.
If European leaders fail to solve the debt crisis, the CEBR warned of a scenario involving "one or more countries leaving the euro, sovereign defaults and banks going bust and needing to be bailed out" which would reduce global growth next year to 1.1%.
The bulk of the economic growth will be in emerging economies. China is forecast to grow by 7.6% (compared with double digit growth rates in recent years) and India by 6% in 2012. But other recent star economies are likely to suffer a sharp slowdown with Turkish growth slowing to 2.5% from 7.1% this year; Saudi Arabia at 4% after 6.1% in 2011; Russia 2.8% from 3.8%; and even Brazil likely to slow to 2.5% growth after 2.8% this year.
"The world economy will not be in technical recession because even on our more pessimistic scenario we still expect positive growth," said McWilliams. "But the slowdown we are expecting will be a sort of double dip, and of course significant parts of the world are likely to be in recession – much of Europe for example."
World Economic League 2011
(Last year's position in brackets)
1. United States (1)
2. China (2)
3. Japan (3)
4. Germany (4)
5. France (5)
6. Brazil (7)
7. UK (6)
8. Italy (8)
9. Russia (10)
10. India (9)