After the Covid epidemic, this was expected to be the year that the global economy recovered.
Instead, a new conflict, record inflation, and tragedies related to climate change defined 2022. Adam Tooze, a historian, popularised the phrase “polycrisis,” and it applied to that year.
In 2023, be prepared for more doom.
According to Roel Beetsma, a macroeconomics professor at the University of Amsterdam, “the number of crises has increased since the turn of the century.”
We haven’t witnessed a situation this complex since World War Two, he told AFP.
Consumer prices started to climb in 2021 as countries began to emerge from lockdowns and other restrictions following the Covid-induced economic crisis of 2020.
Central bankers insisted that rising inflation would only last a short time before economies stabilised. However, the Russian invasion of Ukraine in late February caused prices for food and gasoline to rise.
Because wages are not keeping pace with inflation, households are being forced to make difficult decisions about their spending, which is causing cost-of-living issues in many nations.
The central banks have caught up. They began raising interest rates this year in a bid to rein in escalating inflation, but doing so runs the risk of sending some nations into severe recessions since higher borrowing costs translate into slower economic growth.
The United States’ inflation rate has finally started to decline.
– Spending with caution – The Organisation for Economic Co-operation and Development predicts that consumer prices in the Group of 20 developed and emerging countries would reach eight percent in the fourth quarter before declining to 5.5 percent next year.
The OECD encourages governments to offer assistance to households in need.
According to the Bruegel think tank, 674 billion euros ($704 billion) have already been set aside in the 27-nation European Union to protect consumers from excessive energy prices.
264 billion euros of that sum come from Germany, which has the largest economy in Europe and is the country most reliant on Russian energy supply.
According to a survey by, one in two Germans believe they now only spend money on necessities.
Both consumers and businesses have been harmed by rising interest rates.
Despite indicating they still need to raise rates further to control inflation, the US Federal Reserve and the European Central Bank both started to moderate the pace of their rate hikes in December.
Germany and Italy, another significant eurozone economy, are predicted to experience a recession. The economy of Britain is already contracting. S&P Global, a ratings organisation, predicts that the eurozone will stagnate in 2023.
However, the IMF still anticipates that the global economy will rise by 2.7 percent in 2023. The OECD predicts growth of 2.2 percent.
The relaxation of Covid restrictions in China is fostering optimism for the recovery of the second-largest economy in the world and a key engine of global growth.
The limits had crippled China’s economy and incited widespread unrest.
China sent a sign this week that it was reopening to the outside world when it declared that foreign entry quarantines would expire as of January 8.
The largest concern, according to Beetsma, is climate change, which is “happening in slow motion.”
According to reinsurance giant Swiss Re, natural and man-made disasters have already cost the global economy $268 billion in 2022. An estimated $50–65 billion in insured losses resulted from Hurricane Ian alone.
This year, floods in Pakistan caused $30 billion in damage and economic loss.
The establishment of a fund to compensate vulnerable developing nations that have been ravaged by natural catastrophes was agreed upon by governments at the United Nations climate negotiations (COP27) held in Egypt in November.
Nevertheless, despite the need to reduce greenhouse gas emissions and stop global warming, the COP27 meeting came to an end without any new agreements to phase out the use of fossil fuels.