AMP Capital is expecting the ongoing financial uncertainty in Europe to have an effect on world sharemarkets for some time to come.
Chief economist at AMP Bevan Graham says despite a recent leaders summit agreeing to a overall banking supervisor, a long term solution was not formed.
"For us the European Central Bank cutting interest rates isn't actually going to do a lot because the transmission mechanism there has broken down, so it needs a longer term plan."
Mr Graham says the world is currently in a synchronised growth slowdown and says it is probably a combination of the European debt crisis and general slowdown.
AMP head of investment strategy Keith Poore says despite the downbeat feeling about the economy, some countries are still making money.
He says US earnings were up about 6% in the first quarter of 2012 compared to the same period last year and Japan also made more than last year.
"Earnings should grow at around 4% over the next few years on a nominal basis and that's about two thirds of the rate pre-GFC. That's reflected in the deleveraging that we're now seeing."
He says nonetheless that earnings growth will add to equity returns.
AMP Capital says bonds were the best performing asset class in the three months to June, due to the impact of the Eurozone's fiscal woes on stock markets.
But the fund manager expects equities are likely to perform well in the future despite market volatility.