Goldman Sachs Forecasts 7.7% Annual Gains for Global Stocks Over the Next Decade
Goldman Sachs expects global equities to deliver solid long-term returns over the next ten years, forecasting average annual gains of 7.7% in U.S. dollar terms. The bank described the outlook as being “close to the historical median”, even amid elevated market valuations.
In its Building Long-Term Returns report, Goldman Sachs analyst Peter Oppenheimer said the positive outlook is supported by structural factors including nominal growth, corporate profitability, and shareholder distributions.
Goldman’s building-block model estimates total returns by combining earnings growth, valuation changes, and dividend yield, adjusted for regional differences.
Global Earnings to Remain Key Growth Driver
“Earnings growth remains the primary engine of performance,” Oppenheimer noted, projecting global earnings—including buybacks—to compound at about 6% per year. Dividends are expected to provide the remaining boost, while valuations are likely to ease slightly from current highs.
Regionally, Goldman’s forecasts show notable differences. U.S. equities are expected to return 6.5% annually, driven mostly by earnings and modest dividends, while Europe is projected to gain 7.1%, evenly split between earnings and shareholder returns.
Japan stands out with an 8.2% annual return, supported by 6% EPS growth and policy-driven increases in shareholder payouts. Asia (excluding Japan) could deliver 10.3% annual returns, backed by ~9% EPS growth and a 2.7% dividend yield, while Emerging Markets are forecast to lead with 10.9% yearly gains, driven by strong earnings growth in China and India.
Diversification Beyond the U.S. May Boost Returns
Goldman Sachs advised investors to diversify beyond U.S. markets, favoring Emerging Markets due to faster nominal GDP growth and structural reforms.
Oppenheimer added that a declining U.S. dollar could further enhance USD-translated returns and benefit non-U.S. equities, noting that periods of dollar weakness have historically aligned with stronger global market performance.
