Investors expect the global economy to slow significantly in the coming 12 months, but believe it to avoid returning to recession, the Bank of America Merrill Lynch Survey of Fund Managers for August showed Tuesday.

A net 13 percent of respondents believe that the world economy is headed for a period of weaker growth. "The reading represents a significant swing since July when a net 19 percent were confident the economy would improve," the survey said.

Meanwhile, a net 42 percent of investors still hold the view that a global recession is unlikely in the coming year, it added. The survey was held from August 5 to 11, when world equities fell by 12.3 percent.

Further, investors' forecast for corporate profits showed the biggest downwards swing in the survey's history. According to the survey, a net 30 percent of the panel expects the profit outlook to deteriorate in the coming 12 months compared to July's 11 percent, who forecast an improvement.

RTTNews