Fund managers were less pessimistic about global growth prospects over the past month but more concerned about inflation, according to Merrill Lynchs Global Fund Managers Survey for May. The survey of portfolio managers, CIOs and buy-side strategists showed only 18% of the 191 financial professionals said the world economy is already in recession, compared with 24% in April, while 29% said a recession was likely during the next 12 months, compared with 40% last month. At the same time, the net balance of respondents predicting a rise in global core inflation over the coming year more than tripled to 25% in May from 7% in April, while those expecting higher bond yields jumped to 80% from 55%.
Overall, fund managers remained gloomy about the economic outlook, with 85% predicting below-trend growth and above-trend inflation in the coming year, up from 76% in April. In a question asked for the first time this month, 77% of those polled said estimates for global corporate earnings remain too high. Those saying stocks are undervalued dropped to 15% this month, from 26% in April.
The survey was conducted May 2-8.