Many global indicators are predicting weaker economic growth of 2.5% for global GDP.
The industrialised world is likely to grow at 0.9% with developing economies growing at 5.1%.
The USA is experiencing more buoyant conditions and despite the lack of political agreement on a debt reduction plan, it could be one of the better performing regions, although growth of 1.9% is below trend.
Japan is likely to see some growth as earthquake reconstruction helps to offset weakening exports due to the strength of the yen.
China has been trying to dampen economic activity but it will continue to be the largest contributor to global growth for some years yet.
India is suffering growing pains with annual inflation of 10%, despite 13 interest rate increases since spring 2010, but is likely to grow by 7%.
Weaker commodity prices will affect growth in emerging economies but all will grow at well above the global average.
Europe will be the worst performer with seven economies facing recession.
Even Germany could struggle with weaker Eurozone exports.
Ireland is showing some promise but there is a long way to go yet.
The UK could end up in recession because of fiscal austerity and the overhang of private debt.
Debt and deleveraging are likely to remain the key themes in financial markets.
The scale of required debt reduction is not fully appreciated by electorates which will impact the political landscape and the rate of economic growth.
The average debt to GDP ratio for Europe and the US is 170% while the UK is 210% and Ireland 350%.
‘Zero’ deposit interest rates are here to stay and bond markets will remain heavily influenced by central banks’ focus on minimising the debt burden.
Risk asset prices will continue to be determined by growth prospects.
Analysts estimate that a modest rise in European GDP could translate into corporate profits growth of 5% next year.
If so, present equity values are 20% to 30% below their long term average.
However, if current valuations are correct, this is forecasting a 15% drop in profits.