“The overwhelming theme which we’ll have to contend with in 2012 will be external: the continuation of the global macroeconomic challenges and the effect this has on market confidence. Europe will experience recession in the next year, the US recovery will be patchy and tentative, the large developing economies such as China will slow, and consumer and business confidence will remain tentative. All this suggests slower growth in 2012 compared with 2011.”

With 2012 just around the corner, it’s an appropriate time to look ahead and surmise what the New Year might hold. As with most things, markets are viewed from one’s individual perspective: if you have been invested over the last 5 years, no doubt you’d have been sorely disappointed with S&P/ASX200 price index returns of -20%; if you chipped some funds into the market in the depths of the GFC, say in March 2009, you might be quite pleased with yourself, having enjoyed a market return of 37%. Since the beginning of January, the market (price index)is down 9%, but over the last 3 years, it’s up 20%.

Source: UBS

Current thinking in the mainstream media and in global organizations such as the UN, the IMF and the World Bank is decidedly bearish. Indeed, according to the United Nations report “World Economic Situation and Prospects 2012”, this rather downbeat conclusion is reached:

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