Three dynamics in the global economy may potentially lower economic growth, undermine corporate profits, and keep inflation above 2% over the next five years — all of which should factor into investors’ multi-asset allocations, according to a 132-page report from Rotterdam-based asset manager Robeco.
Robeco provided its forecasts for five-year annualized, projected returns on a range of assets held by euro- and dollar-based investors — including developed- and emerging-market equities, bonds, and cash. Under such a scenario, developed-market equities are likely to underperform their emerging-market counterparts and domestic bonds should offer a higher return than cash for dollar-based investors, according to Robeco.
There’s one potential game-changer that could disrupt Robeco’s “stalemate” scenario and create a bull-case outcome instead: the early and rapid adoption of artificial intelligence across sectors and industries, which would likely spawn above-trend growth and push inflation back to central banks’ targets.