Across Europe, Asia, the US and Australia, the same pattern is becoming increasingly clear: growth is slowing, inflation is pushing higher, and energy markets are tightening under the strain of escalating tensions involving Iran. For households trying to preserve wealth and investors trying to generate returns, the pressure is already tangible.

Jake McLaughlin, Executive Director of deVere Portugal, part of one of the world’s largest independent financial advisory organisations, says the shift is already changing how investors need to think.

“This is where traditional strategies start to struggle. Rising prices are eating into returns, growth is losing momentum, and markets are no longer moving in a clear direction. It changes the entire equation for savers and investors.”

Portfolios are being squeezed from multiple directions. The cost of living is rising, eroding real returns on cash. Market gains are becoming harder to sustain. Traditional defensive assets are no longer providing the same level of protection.

What is unfolding is not just a macroeconomic shift; it is a direct challenge to how capital is preserved and grown.

Fresh data this week from the eurozone underscores the shift.

Business activity has dropped to a 10-month low, with the latest flash PMI reading barely holding above contraction territory. At the same time, input costs are accelerating at their fastest pace in more than three years, driven largely by rising energy prices and renewed disruption to global trade flows.

The signal is unmistakable. Economic momentum is fading just as inflationary pressures intensify. Many would argue this is the worst of all worlds.

McLaughlin says the global nature of the pressure makes it more difficult—but also more important—to respond decisively.

“Energy prices are feeding through every layer of the economy,” he explains. “From manufacturing to transport to household bills, the impact is immediate. At the same time, demand is softening. The combination puts sustained pressure on growth across all major regions.”

The reach is broad. Europe’s dependence on imported energy leaves it exposed to prolonged price shocks.

For investors, this creates a market environment defined less by direction and more by friction.

Equity markets are moving, but without sustained momentum. Companies are facing margin pressure as costs rise and consumers pull back, limiting earnings growth and capping rallies.

Fixed income is also under strain. Bonds are less effective at preserving real value when inflation remains elevated, while cash holdings steadily lose purchasing power. The traditional balance between growth and defence is becoming harder to maintain.

McLaughlin explains that this is where a more “active and informed” approach becomes critical.

“Standing still carries a cost in this environment,” he says. “Savers and investors need to focus on real returns and think carefully about where opportunities still exist.

“There are still key ways to generate income and growth, but it requires a more deliberate strategy.”

Currency markets are adding another layer of complexity, with divergence in economic performance and policy responses driving increased volatility. Risk-sensitive currencies are likely to face pressure, while sharper movements in foreign exchange create both risk and opportunity.

Diversification is becoming more than a standard principle; it’s a necessity. Concentrated portfolios are more exposed to sudden shifts in sentiment or policy, particularly as geopolitical risks remain elevated.

“Diversification across regions, sectors, asset classes and currencies is essential,” McLaughlin notes. “It reduces vulnerability and gives investors more ways to capture opportunities as conditions evolve.”

Energy remains the central driver. Continued disruption linked to tensions in the Middle East would keep oil and gas prices elevated, reinforcing inflation while weighing on growth. The longer these pressures persist, the more they shape economic behaviour, from corporate investment decisions to consumer spending patterns.

At the same time, this environment is not without opportunity. Inflation-linked assets, commodities and energy-related sectors are likely to benefit from sustained price pressures. Companies with strong pricing power and resilient balance sheets are better positioned to maintain margins, even as costs rise.

McLaughlin says identifying these areas is where professional guidance becomes increasingly valuable.

“This is a more complex environment than investors have been used to for many years,” he says. “Opportunities are still there, but they’re more selective. Getting the right advice, structuring portfolios carefully, and staying diversified can make a significant difference to outcomes.”

The re-emergence of stagflation as a credible global scenario changes the investment landscape, but it does not remove the potential for returns.

Markets are still offering opportunities—just not in the same places or in the same way. Extracting them requires a more informed, diversified and forward-looking approach.

Those who recognise the shift early, seek guidance and position accordingly are likely to be in a far stronger position to protect and grow their wealth, even as the global economy enters a more challenging phase.

If you want to contact Jake, you can email him here - Jake.mclaughlin@devere-portugal.pt