Robeco sees government intervention, stakeholder capitalism, and innovation shaping the global economic landscape in the next five years.

The firm has released the 14th edition of its five-year outlook, Expected Returns 2025-2029, which features the mythological titan Atlas who lifts the world on his shoulders with the help of entrepreneurial innovations in artificial intelligence and an abundance of other profitable investment opportunities.

“Our five-year outlook reflects on this new time where capital owners increasingly consider stakeholder well-being alongside shareholder profit. The free-market economy is less efficient, and the era of hyper-individualism is behind us. Instead, today’s investors are focused on a balance between profitability and broader societal impacts,” says Peter van der Welle, strategist, multi-asset solutions, at Robeco.

Laurens Swinkels, head of quant strategy, sustainable multi-asset solutions, at Robeco, adds: “In the current environment, with distorted markets and greater government intervention, generating alpha requires a more research-driven approach than ever. Our report emphasizes the need for strategic investment in this evolving landscape.”

The report presents three scenarios: base case, bear case, and bull case.

In the bull case, which it calls “Atlas Lifted”, with 50% probability, Robeco anticipates moderate but steady economic growth, driven by advancements in artificial intelligence, with GDP per capita in the United States expected to grow by 1.75% annually. Other advanced economies, particularly in Europe, are anticipated to catch up with the US, contributing to balanced global growth. Investment opportunities are expected to improve as capital allocation becomes more efficient. Inflation is predicted to average around 2.5%, with central banks potentially underestimating higher neutral interest rates.

In the bear case, “Atlas Adrift" (30% probability), the firm sees persistent inflation and stagflation in the US, driven by ongoing high government deficits and shifting global power dynamics. Inflation could remain elevated, threatening overall economic stability. This scenario suggests that while the battle against inflation may seem won initially, the overall economic stability will be under significant threat, similar to historical periods of high inflation.

In the bull case, its most optimistic scenario, “Atlas Connected" (20% probability), rapid AI adoption leads to significant productivity gains, with annual growth reaching 2.25%, driving robust economic performance, with real GDP growth approaching 3% and inflation remaining around 2%. Improved geopolitical stability and increased capital deepening would contribute to a favourable investment environment, where central banks maintain neutral policy rates.

The report also presents the investment implications of the different scenarios.

In the base case, risk-free rates are expected to rise, reducing risk premiums across most asset classes. Emerging market equities are expected to deliver the highest returns, with EM stocks projected to return 8.25% annually in USD, followed by developed equities at 7.5% and emerging market debt at 7%. In the credits space, investment-grade corporate bonds are seen yielding 5.75% over the next five years, rising to 6% for high yield. Real estate is seen returning an average of 6.5% a year in the base case, while commodities are expected to bring 5.75% in returns.

In the bear case, Inflation and instability could hurt returns, especially in high-risk investments, while in the bull case, AI-driven productivity could lead to above-average returns for EM debt and commodities, with other sectors also performing well.