THE WORLD economy is slowing and many countries risk falling into recession in 2023. In America sharply higher interest rates, the necessary result of the Federal Reserve’s fight with inflation, threaten to crash the housing market and raise unemployment. Tight money has brought about a strong dollar, which is exporting inflation to emerging markets and making their hard-currency debts harder to service. Europe is grappling with a severe energy crisis that is shutting factories and hurting consumers; the severity of its downturn depends significantly on the weather. And China is fighting with a housing-market crash and the instability brought about by its zero-covid policy, which entails sharp lockdowns at a moment’s notice.

The first half of 2023 may bring some relief. Europe has enough gas in storage to make it through a mild winter without a major crisis. Commodity prices will stay high and volatile, but merely not repeating their rapid ascent of 2022 will be enough to cause headline annual inflation to fall somewhat. The immediate pressure will come off the Fed.