Deep pessimism over growth in 2008

Expectations of economic growth and corporate profits for the next 12 months are among the worst ever recorded, according to the latest Merrill Lynch global survey for December.

A net 62% of fund managers expect the global economy to weaken over the coming year, while a net 60% expect corporate profits to deteriorate – the most pessimistic response in more than a decade.

On this basis, David Bowers, independent consultant to Merrill Lynch, says 2008 may be the year in which the decoupling thesis faces its sternest test.

Meanwhile, earnings growth is expected to face a test this year as 80% say it is unlikely to reach double digits by the year end. Despite this, only 13% of survey respondents expect a global recession in 2008,

Some 195 managers with $689 billion (£348 billion) of assets took part in the survey. It was conducted jointly with Taylor Nelson Sofres, a market research company, from December 7-13.