Tesco is on track to become the world’s second largest retailer within four years, according to new research.

The UK’s biggest supermarket is expected to deliver annual sales of $157.1bn (£106.7bn) by 2012, overtaking French retailer Carrefour and ranking behind world leader Wal-Mart, said international grocery market expert IGD.

Its latest report predicts that international expansion in markets such as China and India will help Tesco to grow its turnover by two thirds between 2007 and 2012 despite the economic turmoil.

IGD is pencilling in compound annual growth of 11% for the retail chain.

However, IGD said retailers would face a “challenging” next few years as the world slips into recession.

Emerging markets are not expected to be immune to the slowdown, but the pace of growth is still set to far outstrip that in the developed world.

IGD is forecasting annual growth of 13.2% between 2008 and 2012 for grocery markets in China and India.

Other emerging markets to watch are Indonesia, Ukraine and Vietnam, it said.

However, Tesco recently reported that the economic downturn was forcing it to slow down the pace of growth in some areas, such as the US.

The group reported UK like-for-like sales growth of 2% in the 13 weeks to November 22 — its slowest growth since the last recession.