Sovereign Wealth Funds have been growing at a staggering 24 per cent annually for the past three years. Projecting out this annual growth rate, Sovereign Wealth Funds will surpass the entire current economic output of the United States by 2015, and European Union by 2016, says economic and financial analysis and forecasting firm Global Insight in its Sovereign Wealth Fund Tracker.

Nigeria has expanded its sovereign wealth the fastest over the last five years, followed by Oman and Kazakhstan. In terms of size China remains the largest followed by Russia and Kuwait.

Sovereign Wealth Funds now represent the most powerful group of global investors and combined sovereign wealth reached $3.5 trillion in 2007, more than enough to match the total annual economic output of the United Kingdom, Germany or France.

"Armed with such large amounts of debt-free cash, Sovereign Wealth Funds are the new financial power brokers, replacing the combined financial muscle of hedge funds and private equity, and usurping central banks as the international capital providers of last resort," said Jan Randolph, head of sovereign risk at Global Insight.

Global Insight says that in 2007 Sovereign Wealth Funds injected up to $80 billion into bank shares or bank equity stakes in the US alone and are expected to provide even more capital in 2008 and 2009.

"There has since been a shift of financial weight from West to East, particularly to China, Asia, the Middle East and other energy countries," continued Randolph. "Riding the energy and commodities boom, together with the wilting dollar, Sovereign Wealth Funds will continue to be the key players in the changing financial landscape of the global economy thrown into flux by the credit crunch," he concluded.

Key findings of the Sovereign Wealth Fund Tracker:

The largest Sovereign Wealth (SW) generator remains China, with approximately $1.2 trillion, followed by Russia and Kuwait.

The fastest growing generators of SW over the last five years were: Nigeria 291 per cent:

Oman 256 per cent; Kazakhstan 162 per cent; Angola 84 per cent; Russia 74 per cent; and Brazil 65 per cent.

High energy and commodity prices, combined with a declining dollar, have turbocharged Sovereign Wealth Funds (SWF) in the Middle East, and spawned a new generation of these funds.

Record inflation in SWF countries is the new "push factor" behind SWF's foreign expansion. Inflation has intensified in China, UAE, Saudi Arabia, Russia and Kuwait, creating pressure to invest domestic money abroad.

The vast majority (93 per cent) of SWF equity investment has so far targeted the western financial sector. But there is new interest in energy and mining companies.

In January 2008 alone, worldwide acquisitions by SWF's totalled $20.6 billion or nearly one-third of the total $60 billion that SWFs made in mergers and acquisitions (M&A) for the entire year 2007. SWFs accounted for 35 per cent of world M&A activity in 2007, and 28 per cent of all M&A in the US during January 2008, exceeding M&A activity from private equity buyouts, which fell in the last quarter of 2007, as the credit crunch unwound debt leveraging.

SWFs have fostered new alliances with private equity to avoid scrutiny. SWFs already account for approximately 10 per cent of private equity investments globally and should grow further in the next few years.

The Sovereign Wealth Fund Tracker maps out the soaring growth of financial resources in emerging economies that is changing the nature of ties between developed and developing countries.