Global investors surveyed in January expressed tempered optimism about growth prospects over the next 12 months. Some stabilisation of the European debt markets following the European Central Bank’s (ECB) provision of cheap loans to banks is buying time for EU member states to engineer an economic recovery, while signs of a modest improvement in the US and the relative resilience of emerging markets to a global slowdown provide further support to investor sentiment.

Opinions among survey respondents and interviewees vary widely according to region – unsurprisingly given the dramatically different growth prospects of emerging Asian and euro zone countries. Most investors agree in their overall assessment. However, geopolitical concerns will evolve over the course of the year, and likewise, positive forces could take hold, bringing more opportunities than investors dare hope for today.

The search for growth is the second annual report produced by the Economist Intelligence Unit, and sponsored by BNY Mellon. The research aims to paint a picture of the global economy and the investment market in 2012, and to explore where investors are looking for growth opportunities in today’s tepid market environment. The report is part of an annual series and builds on the findings of last year’s survey and reports.

 Notable conclusions from the research include:

• Investors see some opportunities in global financial markets. Among survey respondents, 85% perceive significant opportunities, although 51% acknowledge that there are major downside risks. Some easing of the European debt crisis, coupled with a somewhat better economic performance in the US, has created a more stable outlook for financial markets.
• Geopolitics rather than market forces will govern the outcome in 2012. Hopes for further improvement hinge less on economic activity generated by the private sector than on governments' ability to play their geopolitical roles properly. The threat of an oil price spike, tied in part to tensions over Iran’s nuclear programme, is the main risk to the global recovery. However, recent events in Spain may see the future of the single currency union retake the top spot.
• High levels of debt continue to be a major concern. Over the next 12 months debt levels are unlikely to change, but debt continues to restrict the world economy's recovery from the 2008 global economic crisis.
• Low levels of capital investment temper opportunities. Less than half (45%) of respondents think that businesses will increase capital investment in 2012. Respondents from the US, where the economy is slowly improving, appear slightly more optimistic.
• The US finds favour as stable middle ground. With GDP forecast to grow modestly, investors now see the US as offering an attractive risk/reward trade-off. In this year's survey the US moves from fourth to third place for asset price growth, with 40% of respondents placing it among their top three markets.
• Slower growth in China and India shifts attention to smaller emerging economies. Smaller economies are likely to benefit from demographic trends – such as relatively young populations – as well as economic or political factors such as low wage costs, low public and private debt levels, rising domestic consumption and deepening financial markets. South-east Asia, in particular, is attracting investor attention, replacing Brazil in fifth position among markets offering the best opportunities for asset price growth this year.
• European investors are more optimistic than the global aggregate about the euro zone's future. Almost half (47%) of survey respondents agree that an austerity plan is likely to collapse in one or more peripheral euro zone countries, prompting the exit of one or more in the next 12 months. But less than one-third (29%) of European investors think this scenario is likely.
• Investors move away from commodities. Lower demand for many raw materials from sluggish developed markets in the euro zone and elsewhere is pushing investors away from commodities. Another reason, according to some investors, may be a desire by large institutions to concentrate on highly liquid assets during a time of uncertainty.