The global economy will experience rising interest rates and yields in the coming year, with equities and the US dollar expected to be strong performers and US GDP growth increasing above 3% in 2015. Economic reform in emerging markets and normalizing monetary policy are forecast to be the dominant macro trends, according to global asset manager PineBridge Investments.

The revival of Europe will be the biggest surprise in 2015, with Japan, Mexico and India expected to also be strong performers. Other top picks include the US dollar, mid-market direct lending and timber, reported its annual investment outlook.

Markus Schomer, chief economist at PineBridge Investments, believes that monetary policy and economic reform are not only the two macro pillars of the economic outlook for 2015 but are also multi-year trends with important consequences for investors in all asset classes.

"Not all countries are far enough along the recovery path to afford such a monetary stimulus withdrawal. Hence, the start of the global rate hike cycle will split the global economy into two camps: one where central banks follow the Federal Reserve towards a more neutral monetary policy setting; and one where weak growth forces central banks to keep rates lower for longer," he added.

"The emerging markets (EM) reform cycle is the second pillar of our 2015 outlook. The main catalysts are elections that brought to power new, more business-friendly governments in countries like India and Indonesia," he added.

PineBridge continues to view the pace of growth in developing and emerging Asian countries the strongest in the world. Despite the near-term uncertainty and volatility of geopolitics, reform and China's slowdown, the long-term fundamentals in these economies remain intact.

"GDP growth in China will continue to slow in the coming years, but value created by the on-going reforms in state-owned enterprises with better discipline and control has gradually emerged," said Rajeev Mittal, chief executive officer of PineBridge in Asia. "Outlook for India will be positive, driven by the government's effort to ease business regulation and stimulate investment and consumption."

In 2015, what will differentiate prospects for emerging market regions and countries is the degree to which governments embrace economic reforms to boost economic growth.

In China, President Xi Jinping's government is experimenting with free trade zones, looking at state-owned enterprise reform and at ways to open up access to the country's capital markets. Yet China's reforms are not focused on accelerating economic growth, but on managing the structural slowdown.

Entering year two of "Xi-nomics" reform, PineBridge sees value created by better capex discipline, cost control, asset restructuring and mixed ownership working its way into state-owned enterprises, and a potential for China equities to re-rate as profitability and returns on equity improve, given the current modest market valuations.

"We believe China has sufficient control over the main economic levers to avoid a hard landing. It will continue to outperform most other economies in the region, even though we project its growth to slow to 7.3% in 2015 and 7% by 2016," said Schomer.

The market outlook in India is very positive, driven by Prime Minister Modi's initiatives to unshackle the business environment from the rules and regulations that hindered growth in the past. PineBridge remains positive on globally competitive companies that will thrive and look warily on those that have enjoyed protectionism and may now see their fortunes deteriorate.

"We do not expect a big bang, but look for a series of small steps that will improve the efficiency of the bureaucracy and reduce subsidies that stifle business activity," said Schomer "We expect India to post stronger growth rates in 2015."

Japan's recovery was interrupted in early 2014 when the government pre-maturely increased consumption taxes that pushed the economy back into stagnation. In 2015, fundamentals are beginning to revive just as the monetary thrust has been enhanced and given more time to work.

According to Schomer, "It took the authorities longer than expected, but the Bank of Japan (BOJ) eventually increased its asset purchase program and the government abandoned ideas of a further tax increase in 2015. That and the sharply weaker yen should pull the economy out of recession. Similar to the Eurozone, we expect only a moderate improvement in Japanese economic growth to 1.1% after barely growing at all in 2014."

PineBridge believes 2015 will be a challenging year for equities in much of Asia. "On a positive front, lower oil prices should benefit most countries in Asia, including China, India, Thailand and the Philippines. We are also positive on Macau gaming companies due to an increase in the number of hotel rooms," commented Anik Sen, managing director, interim global head of equities at PineBridge Investments.