Investors Cut Growth Expectations Sharply

Global investors have turned markedly more cautious after Bank of America’s latest fund manager survey showed the steepest deterioration in growth expectations in four years, with inflation fears rising and portfolio positioning shifting toward defense amid the Middle East war. Investors slashed growth views by the most in four years, while secondary reporting and market analysis show the April survey covered 193 fund managers overseeing $563 billion and was conducted from April 3 through April 9.

Why the April BofA survey mattered for markets

The April poll marked a sharp reversal from late 2025, when the same Bank of America survey captured one of the strongest waves of optimism in four and a half years. That backdrop has now shifted. Growth expectations have deteriorated, inflation concerns have intensified and overall sentiment has fallen to its weakest level in roughly ten months, with several market reports describing the mood as the most bearish since June 2025.

The numbers that defined the shift

The most striking move was the drop in net global growth expectations to minus 36%, meaning pessimists substantially outnumbered optimists. Cash allocations rose to 4.3%, the highest since May 2025. At the same time, global equity allocation fell to a net 13% overweight from 37% in March, showing that investors cut risk aggressively without fully abandoning equities.

Regional positioning also became much more selective. Net overweight exposure to eurozone equities fell to 4% from 21% a month earlier, while Japan swung to a net 11% underweight after being overweight in March. Emerging markets remained the preferred regional trade, but that overweight narrowed to 41% from 53%. US equities stayed underweight, though less deeply than in March.

Inflation fears rose as stagflation returned to the conversation

Stagflation refers to a period of slowing growth combined with stubbornly high inflation. That became the core macro concern in the new survey. According to reporting on the results, 69% of respondents pointed to higher inflation risks, the highest reading since May 2021. More than three quarters of investors were effectively pricing a more difficult environment in which growth slows while price pressures remain persistent.

Even so, the survey does not yet amount to a recession consensus. Roughly 70% of fund managers do not expect a recession in 2026, and the base case remains a soft landing, meaning inflation cools without a deep contraction in activity. Saxo’s review of the survey said more than half of respondents still lean toward that outcome, while only about 10% expect a hard landing.

Middle East war put oil back at the center of risk pricing

The war in the Middle East is the main reason expectations deteriorated so sharply. In the survey, geopolitics emerged as the dominant tail risk. Fewer than one third of respondents expect full normalization of shipping through the Strait of Hormuz by midyear, suggesting that even a ceasefire would not immediately restore previous trade and energy flows.

Oil has become the main transmission channel from geopolitics into inflation, bond yields and growth expectations. As hopes for diplomacy improved on April 14, Brent crude fell to about $94.79 a barrel in one report, while other market coverage put Brent around $95.43. West Texas Intermediate, the main US crude benchmark, fell to roughly $91.28. According to reporting on the Bank of America survey, the bank sees Brent near $84 by year-end, which helps explain why any easing in the conflict could quickly improve appetite for risk assets.

The IMF gave the broader macro backdrop a harder edge

The International Monetary Fund reinforced the market’s caution on April 14 when it released its latest World Economic Outlook. Under the assumption that the conflict remains limited in duration and scope, the IMF projected global growth of 3.1% in 2026 and 3.2% in 2027. It also said global headline inflation would rise modestly in 2026 before resuming its decline in 2027, with the pressure especially pronounced in emerging market and developing economies.

That means the Bank of America survey did not arrive in isolation. It landed alongside an official downgrade to the global outlook and a broader warning that an energy shock could push the world back toward the uncomfortable mix of softer growth and stickier inflation. The IMF added that a longer or broader conflict, deeper geopolitical fragmentation and tighter financial conditions could significantly weaken growth and destabilize markets.

Why markets still stopped short of panic

Despite the deterioration in expectations, investor behavior still looks more like a fast repricing of risk than a full liquidation. Cash rose, but remained below the 5% threshold many strategists treat as a classic sign of capitulation. Global equities are still net overweight, even after the sharp reduction. That suggests investors have de-risked forcefully without moving into outright panic.

That split is also visible in the US equity market. MarketWatch reported on April 14 that the S&P 500 climbed to around 6,922, leaving it less than 1% below its record close of 6,978.60 set on January 27. In other words, survey sentiment deteriorated sharply even as equities retained enough momentum to hover near all-time highs on hopes of easing oil pressure and eventual policy relief from central banks.

As International Investment experts report, the April Bank of America survey matters not only as a sentiment snapshot but as evidence that global markets are once again pricing the economy through the lens of energy shocks, inflation and geopolitics. If tensions in the Middle East ease, some of the current pessimism could unwind quickly. For now, however, oil, inflation expectations, shipping through the Strait of Hormuz and central bank signals remain the key variables for investors.

As International Investment experts report, Bank of America’s April survey matters not only as a gauge of weaker global sentiment, but also as a sign that capital is beginning to rotate toward jurisdictions investors see as more predictable and geographically removed from the main conflict zone. Against that backdrop, Georgia is drawing added attention as a relatively safe destination for tourism, real estate purchases and private investment. The country’s economy has remained resilient in 2026 despite rising global uncertainty, a point highlighted by the International Monetary Fund. Tourism also continues to be a major source of foreign-currency inflows: according to Geostat, the number of international visitors to Georgia rose 7% to 5.8 million in 2025, while the first quarter of 2026 delivered a record number of tourist visits even as total international trips edged slightly lower.

In practical terms, this suggests that some investor capital is indeed turning toward Georgia as a market that could benefit from demand for safety, accessibility and a relatively clear entry point into assets. That interest is most visible in real estate, hospitality and service infrastructure. TBC Capital’s analysis indicates that the Middle East conflict is already being treated as a key variable for Georgia’s tourism and property markets in 2026, while the country’s tourism strategy is explicitly targeting high-spending travelers from the Middle East.

FAQ: what the new BofA survey means

Question: What did Bank of America’s April 2026 fund manager survey show.
Answer: It showed a sharp downgrade in global growth expectations, rising inflation worries and more defensive positioning by investors. Bloomberg’s indexed result described it as the steepest cut in growth views in four years.

Question: Does this mean investors expect a global recession.
Answer: Not yet. Around 70% of respondents do not expect a recession in 2026, and the base case is still a soft landing.

Question: Why is oil central to the market reaction.
Answer: Oil is the main channel through which geopolitical stress feeds into inflation, bond yields and growth expectations, which is why news on Iran diplomacy and the Strait of Hormuz moves sentiment so quickly.

Question: What does stagflation mean.
Answer: It means slower economic growth combined with elevated inflation, and that risk rose sharply in the April survey.

Question: Did official institutions confirm the weaker macro backdrop.
Answer: Yes. On April 14, the IMF lowered its 2026 global growth forecast to 3.1% and said global inflation would tick up in 2026 before resuming its decline in 2027.