Switzerland’s largest bank has warned that a global economic recovery will take much longer, and occur at a much slower pace, than many investors expect.

It comes at a time when market focus is largely attuned to global trade developments, amid conflicting signals over the extent of progress in trade talks between the world’s two largest economies.

“We are running at very, very low global growth levels,” Arend Kapteyn, global head of economics and strategy research at UBS, told CNBC’s Joumanna Bercetche on Wednesday.

Speaking at the UBS European Conference in London, Kapteyn said that global growth levels were tracking at about 2.6% on an annualized basis at present and the outlook “doesn’t get better for the next three quarters.”

“Actually, we are going to hit a bit of an air pocket in the first half of next year because we are still actually seeing these existing tariffs feeding their way into the data.”

US-China ‘close’ to a trade deal

The U.S. and China have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.

Expectations of a so-called “phase one” trade deal between the two economic giants have been rising in recent weeks, supporting stocks and riskier assets.

However, a lack of progress on an agreement has intensified concerns about whether a trade deal will take place at all.

Speaking at the Economic Club of New York on Tuesday, President Donald Trump said both sides were “close” to reaching a “phase one” trade deal but did not offer any details on where or when it might be signed.

The U.S. president also repeated an accusation of China “cheating” on trade, though he blamed the situation on past leaders of the world’s largest economy.

Autos, tech, shale

UBS’ Kapteyn warned about the dangers of a “real disconnect” in financial markets, with relatively weak economic data contrasting with hopes of a comprehensive breakthrough in U.S.-China trade talks.

Even if the world’s two largest economies secure a limited trade agreement over the coming weeks, Kapteyn warned that “economically, nothing snaps back.”

That’s because the “auto cycle is still working its way out, you’ve got the tech cycle that’s actually recovering, we think, second half of next year and the shale cycle is very uncertain.”

“Our fear is that actually you are going to get a recovery, but it is much later than people think, and it is on a trajectory that is much flatter than people expect.”

Last month, the International Monetary Fund (IMF) cut its forecast for growth both in 2019 and 2020.

The Washington D.C.-based institute said it anticipated global growth would be 3% this year, down from 3.6% last year, and a 0.3 percentage point reduction from its April forecast.

The Fund projected global growth would pick up to 3.4% in 2020, down from 3.6% six months earlier.