Earnings growth will be the main driver for global equity markets over the next year as the world economy picks up, the chief global equity strategist at Goldman Sachs told CNBC.
Peter Oppenheimer told CNBC Europe's "Squawk Box" on Monday that a combination of an improving economy with low inflation and interest rates set the scene "for a pick-up in profitability and equity prices" over the next year and beyond.
He forecast the U.S. economy would grow 3.8 percent at an annualized rate by next July but because inflation was so low and the output gap still large, interest rates could stay low probably until early 2016.
"We're talking about the gradual normalization of global GDP growth here. By next year we're expecting global GDP to be growing at about 3.8 percent," Oppenheimer said.
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So far, one-fifth of S&P 500 companies have reported quarterly results, with 65 percent of companies posting earnings above estimates, while 51 percent missed expectations, according to data from Reuters. If all remaining companies report earnings in line with forecasts, earnings will be up 2.9 percent from last year's second quarter.
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"It's true that generally, the results have beaten expectations," Oppenheimer remarked. "But also the size of the beat is important and so far the size of the beat has been bigger than average. Partly because of financials but even if you exclude financials, in general the overall beat has been bigger than normal," he said.
"Markets have moved up strongly in the last year and a lot of that is on expectations of a recovery. We expect that recovery to come through. We think the next phase of the rise in equity prices is not going to be about multiple expansion but about earnings recovering as the global economy picks up and gradually gets back to a normalized trend."
- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt