While global growth forecasts for 2011 have stabilised, those for next year continue to tumble. Global leading indicators all point to a weaker outlook for next year with growth in world trade forecast by the OECD to drop below 5% from nearly 7% this year. Global PMIs indicate a manufacturing sector continuing to downshift although somewhat surprisingly the latest service sector activity report showed a modest rise. Obviously, there are wide variations across regions and countries but lowered forecasts are not just the preserve of the eurozone; all the other main regions, with the exception of the key U.S. economy, have experienced further cuts.

Along with reduced GDP forecasts in most of the main OECD countries, growth is also softening in the developing world. So far, estimates have generally only recorded modest downward revisions but there is little doubt that risks to them have risen.