In its 2017-2021 Expected Returns report, Dutch asset manager Robeco attached a 60 per cent probability to its baseline scenario of normalisation for investment markets.
Robeco chief investment officer, investment solutions, Lukas Daalder said it has "never been easier to come up with credible doom scenarios".
To name a few, Mr Daalder listed: the further disintegration of the European economy, a Chinese hard landing, a rise in protectionism (Trump), the loss of central-bank credibility (Japan), and the bursting of the debt bubble.
Mr Daalder said general sentiment among professional investors has "never been as weak as it is right now".
"Faced with yet another disappointing year and the growing list of potential risks, it is tempting to succumb to the general feeling of pessimism," he said.
"Tempting, but we continue to believe that a gradual normalisation is the most likely outcome. Call us optimists if you like."
Mr Daalder said one fact overlooked by many analysts is that labour markets have strengthened despite low growth – with unemployment rates in all of the leading economies currently below their longer-term averages.
"In [our baseline scenario], consumers whose disposable income has been boosted by the drop in oil prices are expected to play a central role, as the balance sheets of the household sector have generally improved," he said.
Specifically, Robeco's baseline scenario predicts 3 per cent growth for the global economy, with 2.5 per cent inflation for the world as a whole and 2 per cent for developed countries.
The likelihood of the 'normalisation' scenario has decreased from 70 per cent in October 2015 to 60 per cent today, Mr Daalder added.
Robeco also attached a 30 per cent probability to an 'ongoing stagnation' scenario, and 10 per cent to a 'high growth' scenario.
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