In the United States, jobs figures, retail sales and business spending are all dropping. Economic growth is slowing in China and India. In Europe, a seemingly endless euro-zone crisis has steamrollered over Spain, making Greece's drama seem a sideshow. The Middle East has its own problems of political instability, which has had major consequences for the economies of countries such as Egypt and Syria.
These are the ingredients of a very bad year to come, and the past three and a half haven't been much of a joyride. The combination of crippling levels of debt and a global crisis in economic confidence, leaves the IMF predicting a 0.2 per cent contraction of the global economy.
There are, in short, many people who are listening to "Dr Doom", a moniker earned by the economist Nouriel Roubini for his predictions about the 2008 economic crisis. "Next year is the time when the can becomes too big to kick it down [the road] … then we have a global perfect storm," Dr Roubini warns.
The catalyst could be the troubled euro zone, where continuous bad news has sapped economic confidence for more than a year. At the weekend, a massive bailout plan for Spanish banks was quickly followed by more bad news: the region of Valencia asked for a federal rescue package, stock markets took their worst tumble in two years, sovereign borrowing costs exceeded 7 per cent and GDP growth projections were revised into negative territory. Spain's haemorrhaging, like Greece's, will be very hard to stem.
A spillover of Europe's troubles into the Middle East would probably first be felt in dropping oil prices, as slowed global economic activity resulted in reduced demand. For GCC countries that were relatively shielded from the downturn since Lehman Brothers collapse in 2008, this is a real concern. In early 2009, US crude prices fell briefly to below $40 per barrel, and oil-producing countries felt the shock.
Even given the clouds on the horizon of Dr Roubini's "perfect storm", $40 per barrel is a bleakly low market price. Part of the planning for tough economic times is keeping a level head, and resisting knee-jerk reactions to the bad news of the day. But prudent planning in the coming year, in the UAE and elsewhere, has to take into account the warning signs.
Budgetary planners will be familiar with this reality and remember precipitous drop in oil prices in the 1990s, which saw prices bottom out at $10 a barrel after the 1998 Asian financial crisis. Those days are unlikely to return any time soon, but also a fair reminder that today's $106 a barrel prices are not guaranteed either.
