Stock market pundits remain amazingly positive about the outlook for 2013 in the face of a deteriorating economy and signs in Washington that the US ‘fiscal cliff of higher taxes and lower spending may not be so easily sidestepped as some observers assume .
The Organisation for Economic Cooperation and Development yesterday axed its global growth forecasts for 2013 and warned that the world could plunge back into recession without significant political action in the United States and Europe.  The Paris-based organization saw the eurozone as the biggest risk.
European finance ministers have just reached an agreement on Greece with another rescheduling of loan terms to include a 10-year holiday on interest payments. But the $1.2 trillion black hole of the Spanish banking system looms as a far greater challenge while austerity measures continue to undermine growth prospects.
The OECD now has the eurozone contracting by 0.1 per cent next year compared with an earlier forecast of plus 0.9 per cent. Growth in the US was also shaved down from 2.6 to two per cent, assuming that the $600 billion ‘fiscal cliff’ is avoided entirely and that China avoids a hard landing.
These are all big assumptions. The report barely mentioned the world’s third largest economy Japan whose economy looks in the most imminent danger of a complete collapse. Japan is China’s biggest single export market so would have an enormous impact on the middle kingdom if things continue to go badly wrong.
For the Gulf Oil States reduced growth in the developed and emerging economies  would be felt through a lower oil price and lower oil revenues. However, any serious economic problems would doubtless be met by further rounds of money printing by the global central banks and that would support high oil prices and low interest rates.
The Oil States have been the only countries in the world in surplus over recent years and have substantial cash reserves to tide them over another crisis as well as enviable borrowing capacity at a time when few creditors have the collateral of oil wealth.
All the same reduced global economic activity would mean less trade and tourism for these countries and dampen the strong recovery in GDP seen in 2012. Stock markets would also face a pretty rude wake up call, and now look an accident waiting to happen.