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Get ready for a recession. That warning comes in a report released on Wednesday from Montreal-based Fiera Capital Cop.

The firm’s updated Global Financial Forecast 2018-2025 includes the  prediction of a “mild” recession for late 2020 or early 2021.

The forecast sees the economy continuing to grow in 2018 and 2019, which will, in turn, push inflation over 2%, leading to higher interest rates.

Francois Bourdon, global chief investment officer, comments:
“Our seven year outlook focuses on the key driving forces of return and looks for key market differentiators and changes. Markets continue to normalize, central banks look set to continue raising interest rates, and global politics are expected to have an increasing influence over investments and returns. Meanwhile overall market growth looks set to continue for the next couple of years driven by improved productivity and increased capacity usage leading to a mild recession in late 2020 or early 2021.”

For capital markets, the modest economic growth of the next couple of years are expected to produce “low albeit still positive returns for equities, losses for bonds, increased volatility and rising commodity prices,” the Feira forecast states.

Once the recession emerges, Fiera foresees, “plummeting equity values, positive returns for bonds, high volatility and lower commodity prices.”

The downturn will be “relatively mild”, according to Fiera, and won’t require exceptional efforts from central bankers to revive growth.

“The recession is followed by a recovery, when the stock market rallies to new highs and interest rates recover towards levels closer to historical norms,” the forecast states.

Fiera expects valuations to normalize by 2025, with interest rates rising to the 4% to5% range.

“At present, traditional strategies including fixed-income and equities generally do not rate too highly. We think that asset classes such as infrastructure, agriculture and hedge funds however, are looking more interesting. We believe a greater focus on these assets will position portfolios more favorably for the future,” says Francois Bourdon, global chief investment officer at Fiera, in a statement.