The world is about to enter a low-growth “window of weakness” with near equal possibilities it will slip into recession or bounce back to recovery in the next year, according to a new economic forecast from Pacific Investment Management Co.

“We will be on a knife edge for the economy,” Joachim Fels, Pimco’s global economic adviser, said Thursday in a Bloomberg Television interview.

“While a recession is not our base case, it doesn’t take much to tip over an economy that is moving along at stall speed,” Fels and Andrew Balls, Pimco’s chief investment officer for global fixed income, wrote in the report. “During this window, we think it prudent to focus on capital preservation, to be relatively light in taking top-down macro risk in portfolios, to be cautious on corporate credit and equities.”

The firm predicts:

U.S. growth falling to 1.25%-1.75% in 2020 from 2.2% this year

China slowing to 5%-6% from 6.1%

Europe is the main place to watch for recession risk. “Germany is probably already in technical recession and this is likely to drag down the rest of the euro zone,” Fels said in the TV interview

Recession risks rising if U.S.-China trade tensions get out of control, the Federal Reserve “under-delivers” relative to market expectations or corporate investment slows amid growing uncertainty.

This article was provided by Bloomberg News.