Kristalina Georgieva said 2023 will be "tougher" than last year as the global economy faces challenges.

This was supposed to be the comeback year for the world economy following the Covid pandemic.Instead, 2022 was marked by a new war, record inflation and climate-linked disasters. It was a "polycrisis" year, a term popularized by historian Adam Tooze.Get ready for more gloom in 2023."The number of crises has increased since the start of the century," said Roel Beetsma, professor of macroeconomics at the University of Amsterdam."Since World War Two we have never seen such a complicated situation," he told AFP.After the Covid-induced economic crisis of 2020, consumer prices began to rise in 2021 as countries emerged from lockdowns and other restrictions.Central bankers insisted that high inflation would only be temporary as economies returned to normal. But Russia's invasion of Ukraine in late February sent energy and food prices soaring.Many countries are now grappling with cost-of-living crises because wages are not keeping up with inflation, forcing households to make difficult choices in their spending.Central banks have played catch-up. They started to raise interest rates this year in an effort to tame galloping inflation -- at the risk of tipping countries into deep recessions, since higher borrowing costs mean slower economic activity.Inflation has finally started to slow down in the United States and the eurozone.Careful spendingConsumer prices in the Group of 20 developed and emerging nations are expected to reach eight percent in the fourth quarter before falling to 5.5 percent next year, according to the Organization for Economic Co-operation and Development.The OECD encourages governments to provide aid to bring relief to households.In the 27-nation European Union, 674 billion euros ($704 billion) have been earmarked so far to shield consumers from high energy prices, according to the Bruegel think tank.Germany, Europe's biggest economy and the most dependent on Russia energy supplies, accounts for 264 billion euros of that total. One in two Germans say they now only spend on essential items, according to a survey by EY consultancy.Rising interest rates have also hurt consumers and businesses.Both the US Federal Reserve and European Central Bank began to slow the pace of their rate hikes in December, but signaled they still need to go higher to get a grip on inflation.Economists expect Germany and another major eurozone economy, Italy, to fall into recession. Britain's economy is already shrinking. Rating agency S&P Global foresees stagnation for the eurozone in 2023.But the International Monetary Fund still expects the world economy to expand in 2023, with growth of 2.7 percent. The OECD is forecasting 2.2-percent growth.The easing of Covid curbs in China is raising hopes for the revival of the world's second-biggest economy and major driver of global growth.The curbs had torpedoed China's economy and sparked nationwide protests.China signaled this week that it was reopening to the world as it announced that it would end quarantines for overseas arrivals from January 8.Climate costsBut for Beetsma, the biggest crisis is climate change, which is "happening in slow motion".Natural and man-made catastrophes have caused $268 billion in economic losses so far in 2022, according to reinsurance giant Swiss Re. Hurricane Ian alone cost an estimated insured loss of $50-65 billion.Floods in Pakistan resulted in $30 billion in damage and economic loss this year.Governments agreed at United Nations climate talks (COP27) in Egypt in November to create a fund to cover the losses suffered by vulnerable developing countries devastated by natural disasters.But the COP27 summit ended without new commitments to phase out the use of fossil fuels, despite the need to cut greenhouse gas emissions and slow global warming."It is not an acute crisis but a very long-term crisis, protracted," Beetsma said. "If we don't do enough, this will hit us in unprecedented scale."© Agence France-Presse

NPR's Steve Inskeep speaks with Republican Congressman Mike Gallagher of Wisconsin, chairman of the China select committee, about the economic and security challenges posed by Beijing.

New year, new inflation rates? For many Americans enduring higher prices, that's likely something on the wishlist for 2023. In November 2022, inflation did ease to 7.1 percent, down from 7.7 percent in October. It was the fifth month in a row that inflation rates have dropped. The annual rate is still steep, but things appear to be moving in the right direction. The question now is whether that will continue through 2023. Signs are pointing to yes, but there are a lot of factors at play. Here's a look ahead. Where are inflation rates expected to go in 2023? It depends on who you ask — and what the future holds. Kiplinger predicted that "the slowing economy is likely to bring the yearly inflation rate down to 3.2 percent by the end of 2023." Preston Caldwell, head of U.S. economics at Morningstar, told TIME's NextAdvisor that "we expect inflation to undershoot 2 percent in 2023 and 2024," as sources of the current high rate recede and monetary policy tightens. Meanwhile, NextAdvisor explained that there's "no clear answer among economists" to the question of whether peak inflation in the U.S. has passed. Though there are promising signs — such as price declines in sectors like used cars, gas, and apparel — there are a number of factors at play in determining the future inflation rate, including Fed decisions on interest rate hikes, the strength of the U.S. dollar, and developments in the war in Ukraine. All of this to say, other experts contend that it could be two to three years before we see inflation truly come down. Are high prices on their way out? No, probably not. NextAdvisor put it succinctly: "Economists and financial experts agree on one thing: Higher prices will likely last well into next year, if not longer."  However, we might start to see light at the end of the tunnel as supply chains adapt and supply and demand reach a better balance, alongside further action from the Federal Reserve. What's the Fed likely to do next? The latest inflation data seems to have prompted the Federal Reserve to back off a bit on its interest rate hikes. On December 15 it raised its benchmark short-term interest rate by 0.5 percent, following four straight 0.75 percent hikes. Even though wage increases are slowing, they still remain high. This could lead businesses to keep increasing prices in an effort to maintain profit margins, further fueling inflation. So it's likely there are more interest rate hikes to come. Fed Chair Jerome Powell indicated the central bank would keep raising rates but probably slow its increases further at its next meeting at the end of January 2023. NextAdvisor explained that "[e]xperts say that we'll need more than one month of lower-than-expected inflation numbers" before the Fed can stop putting up rates. Should we be worried about a recession? Many experts are sounding the alarm. A Reuters poll of economists published in early December 2022 suggested that there is a 60 percent chance of a recession in 2023, with a slowdown in U.S. economic growth expected. Treasury Secretary Janet Yellen has stated that there is a "[t]here's a risk of a recession," as has JPMorgan CEO Jamie Dimon, who warned that a "mild to hard recession" is possible. That sentiment was also echoed by Doug Duncan, senior vice president and chief economist at Fannie Mae. "The economy continues to slide toward a modest recession, which we anticipate will begin in the new year, with housing leading the slowdown," said Duncan. For those who prefer a glass half-full approach, there are some experts with a rosier outlook. The Conference Board CEO Steve Odland told CNBC he thinks any possible downturn will be mild. And in an even more optimistic view of things, Goldman Sachs says its research indicates the U.S. will "narrowly avoid a recession." Its economists forecast that the chance of a recession in the next year is just 35 percent.