Myriad factors point to a recession within two years but web3.0, NFTs and blockchain will "reconfigure the investment landscape", according to Pictet Asset Management.

Writing in its secular outlook, chief strategist at Pictet AM Luca Paolini warned that falling equity returns as a result of the global economy's expansionary phase approaching its end, tighter financial conditions, a peak in US jobs growth and larger output gaps "all point to a recession within the next two years".

Bond markets near the bottom with a recession already priced in

While developed market growth is set to stall, Paolini argued that emerging markets would offer "double-digit opportunities", with EM equities forecast to return 10.5% over five years and EM Asia equities expected to return 10.8% in the same time period, while China's 12.9% is predicted to be the strongest globally.

Commodities, particularly those outside the energy complex, could return "well in excess of inflation", alongside real estate and private equity, Paolini said, with gold and infrastructure helping diversify risk.

Pictet AM senior multi asset strategist Arun Sai extolled the virtues of web3.0, NFTs and tokenisation, arguing these were "set to reconfigure the investment landscape.

"Disruption across the internet and digital economy will proliferate across the next five years," he said. "A crucial distinguishing feature of web3.0 is a built-in mechanism that uses digital tokens to financially incentivise participants.

"We believe such tokens have the potential to extend into markets for financial and real assets, including stock, bond and property markets as tokens become an accepted digital representation of private ownership and blockchain the arbiter."

Proceed with caution when navigating the metaverse

He added the Metaverse was "offering a glimpse of what this future might look like" and predicted the market would reach $800bn by the mid-2020s, suggesting NFT sales would "grow more than 10% every year to 2030".

The new digital economy has drawn headlines recently, with stablecoin Luna breaking from its peg last month, collapsing to $0.16 and a mystery false press release circulated alleging GAM would back the coin. The more integral tether stablecoin also broke from its peg, leading to US Treasury Secretary Janet Yellen comparing these moves to bank runs, and interest in NFTs has fallen 78% since its January peak, according to Google Trends.