Institutional investors expect the global economy to land softly in 2007 and are poised for a year of growth that is neither "too hot" nor "too cold," according to a survey released on Tuesday.

While they expect growth to slow, institutional investors see little risk of recession, said Merrill Lynch's Survey of Fund Managers for December.

With growth rates falling back to levels that bring output in line with its long-term trend, they believe that inflation risks can be contained.

A net 53 percent of respondents expect that the world economy will weaken. However, a greater majority (a net 83 percent) say that recession is unlikely in 2007. Furthermore, 70 percent of the panel now think that the current monetary policy stance is appropriate, with 62 percent of those polled expecting short rates to be unchanged or lower in the year to come.

Long-term interest rates remain a concern, as 82 percent of fund managers say they will be unchanged or higher in 12 months' time.

"Fund managers are suggesting that if there is a cloud on 2007's horizon, it could take the form of higher bond yields," said David Bowers, independent consultant to Merrill Lynch.

"It will be interesting to see how the U.S. housing market will handle an upward move in long-term rates," he added.

A total of 210 fund managers, controlling a total of 713 billion U.S. dollars, were polled in the global survey on Dec. 8-14.