The latest sigma study, "Rebuilding better: global economic and insurance market outlook 2021/22", predicts that recovery will be slow and uneven in 2021.
Global GDP is forecast to grow by 4.7% in 2021 in real terms, below the market expectation of 5.2% growth.
In this context, the sigma study finds that, amid the economic shock inflicted by COVID-19, global insurance markets have been less severely impacted than expected in the Swiss Re Institute June 2020 forecast.
Total premium volumes in 2020 are estimated to decline by 1.4% in real terms, less than the earlier anticipated 2.8% drop. Premium growth is forecast to recover swiftly to 3.4% and 3.3% in 2021 and 2022 respectively, supported by continued rate hardening.
Looking at countries' economic resilience levels, the pandemic will impact each economy depending on its capacity to absorb shocks and its government policy. Preliminary data suggest fiscal responses will be the key differentiator. Among the large advanced economies, the UK, Japan and the US are expected to see their fiscal buffers depleted most.
Income inequalities will further widen as many lower paid jobs were cut in the downturn and labour markets will be more severely impacted than official data indicate. For example, the official euro-area unemployment rate has remained surprisingly steady at around 7.9%. The shadow unemployment rate, however, which takes into consideration inactive and furloughed workers as well as the officially unemployed, has reached almost 25% in Europe's four largest economies: Germany, UK, France and Italy.
"For sustainable economic recovery, we need a policy reset. Public policy should focus on areas such as infrastructure, technology and climate. Building new sustainable infrastructure will have a significant impact on GDP growth," said Jerome Jean Haegeli, Swiss Re Group Chief Economist.
Click here to read the study.