Global economic growth will weaken in 2020 and 2021, but the engine of global growth will be emerging Asia according to the Swiss Re Institute (SRI).
Insurance markets will continue to grow “at trend” as a result of strong demand in emerging Asian markets, particularly in China where, in 2020, P&C premiums are forecast to grow by 9% and life premiums by 11%; globally, P&C and life premiums are expected to increase by around 3% in each of the next two years.
In the Sigma report Sustaining resilience amid slowing growth: global economic and insurance market outlook 2020/21, the SRI forecasts US and euro area growth next year of 1.6% and 0.9%, respectively, below consensus. The main engine of the global economy will be emerging Asia, with near 6% growth in both India and China.
The main risk to the growth outlook is an escalation of US/China trade tension, while the euro area is at risk of “Japanification” – so called after when the country begun experiencing decades of low growth and high debt.
“Our outlook on global growth has deteriorated from a year ago”, commented Jerome Jean Haegeli, group chief economist at Swiss Re. “The US/China trade conflict has been more far reaching than anticipated. In a broader sense, geopolitical developments have not improved.”
He added: “Rather, we have seen more polarisation across the world, all of which has added to the environment of uncertainty, including for business.”
Unfortunately, low and negative interest rates are expected to remain meaning a new policy mix is needed to stimulate growth; this could include fiscal spending in infrastructure and sustainable investments.
 
 

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