Resilience Index 2021: a strong growth recovery, but less resilient world economy

Global macroeconomic resilience weakened by 18% in 2020 on account of the COVID-19 crisis. We forecast a strong recovery in global economic growth this year. This will support some rebuilding of resilience, but not to the extent of fully recouping the losses that resulted from last year's pandemic-induced global recession.

Last year's sharp weakening in global macroeconomic resilience was driven by extraordinary levels of fiscal stimulus in advanced markets, actioned to cushion the economic blow of the pandemic. Consequently, government debt levels in advanced economies rose by more than 16%, the largest annual increase since the turn of the century. These increases were accommodated for by very loose monetary policy, which kept a lid on debt servicing costs.

Resilience pays off. With stronger macro and health insurance resilience before the onset of the pandemic, advanced markets had more capacity to put macro resilience resources to work to offset the economic fallout than emerging markets.
Jerome Jean Haegeli, Group Chief Economist , Swiss Re

The Swiss Re Institute Global Composite Insurance Resilience Index, an aggregate of three sub-indices for health, mortality and natural catastrophes, slipped to 54.1% last year from a revised 54.7% in 2019. The combined world protection gap for health, mortality and natural catastrophe risks reached a new high of USD 1.4 trillion in 2020. Health risks contributed more than half of the total gap (USD 747 billion, 54% of the total).

Emerging markets have been more vulnerable to the negative economic and other fallout from the COVID-19 crisis. Emerging EMEA, emerging APAC and Latin America have a combined gap of USD 816 billion and accounted for 59% of the total global gap.

We expect overall resilience to improve in 2021, not least as the pandemic shock has raised awareness of the importance of risk protection covers. Despite recession demand for health insurance in emerging markets rose last year, with premium volumes up 17% in real terms.

Read the annual update for more.

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