Given the current wave of economic uncertainty and the instability of stock markets in wealthy nations, it’s not too surprising that merger-and-acquisitions activity is down so far this year.

Total global deal volume weighed in at $1 trillion during the first 19 weeks of 2008, down nearly 30 percent from $1.4 trillion during the same time last year, according to a new analysis by Ernst & Young LLP’s Transaction Advisory Services group.

Nevertheless, deal activity remains strong in emerging markets. So far in 2008, total transaction volume surged more than 14 percent, to $90.7 billion in the so-called BRIC countries (Brazil, Russia, India, and China). “Transactions in emerging markets tend to be smaller, minority investments that are less reliant on the credit markets,” explained Steve Krouskos, Leader of Americas Accounts for Ernst & Young’s M&A advice unit. “This has helped sustain deal activity in these markets through the current market cycle.”

Overall, the consultancy expects merger and acquisition activity to stabilize throughout the remainder of 2008 and the first half of 2009. Private equity firms and corporations still remain armed with huge arsenals of cash to conduct deals once the lending environment is restored. “Once the overhang from the credit crunch is gone and lenders return to the transactions table and sellers adjust to more rational price expectations, we expect to see this cash funneled directly into the deal market,” said John O’Neill, Ernst & Young’s Americas director of private equity.

The infrastructure, financial services, real estate, oil and gas, media and entertainment and technology sectors lead overall transaction volume, according to E&Y. Because of their currently undervalued assets, those sectors also have the biggest chance to stimulate a market rebound, the firm added.