Investment managers are bearish on financial recovery for at least 18 months, with both equities and bond veterans saying it could be fiscal 2014 before prospects improve.
Platypus Asset Management chief investment officer Donald Williams said conditions were improving, but the progress would be gradual.
PIMCO Australia head of portfolio management Rob Mead said that with the federal government targeting a balanced budget, the fiscal contraction associated with moving from deficit to surplus "will impose a significant headwind for growth as compared to previous years".
Williams said recent interest rate cuts - which usually took at least a year to be fully effective - would show their full impact at the start of the 2014 financial year.
"The outlook for Europe is still very poor and China's economy is slowing, albeit deliberately," he said.
"On the bright side, we see China moving from a policy-driven economy to a more sustainable one, with a change in focus from investment to the consumer."
Mead said the tightening of fiscal policy meant low interest rates and a weaker Australian dollar would be the only escape valves for the Australian economy.
"Economic growth rates in both the developed and emerging worlds [will] be lower going forward than they have been historically and, as a result, expected returns from all asset classes should be revised down going forward," he said.
The second half of the 2013 financial year, Williams said, should be stronger and would be a springboard for better earnings in fiscal 2014.
While additional growth in capital expenditure was unlikely in 2013, "by 2014 we should be seeing the full benefit of lower rates and better global growth", he said.
"We anticipate a better year for earnings and equity market performance," he said.
The federal election due in 2013 would be a major event.
"A change in government (as seems likely at this stage) could lead to improved sentiment, but this will depend on whether any new taxes are introduced. Also, the potential for nastiness in the election could cause problems," he said.
While both commentators were conservative about markets, Mead said Australian investors, unlike many overseas, could still generate positive real returns in the bond market and "despite the low outright Commonwealth government bond yields, these opportunities should not be overlooked".
