Swiss Re Institute
Research
sigma research
Economic Outlook
Economic and financial risk insights – Watch out for paradigm shifts
Article information and share options
Published on:
09 Apr 2020
We expect a global recession in 2020, with economic activity contracting by 1.2%, not far off the -1.8% drop in 2009. The partial economic shutdown is likely to remain in place through most of Q2, assuming new infections in Europe and the US peak in April/May, followed by a gradual return to growth in 3Q (see chart a). We project an atypical recession which will be twice as deep and more than twice as fast as the Global Financial Crisis (GFC), but relatively short lived.
Key Takeaways:
We expect a global recession with global economic activity contracting by 1.2%.
We expect real GDP to fall 3% in the US, and 4.5% in the Euro area in 2020.
The immediate output loss will be twice as deep and more than twice as fast as during the Global Financial Crisis.
Output lost, especially in the service sector, will not be fully recovered.
Interest rates will remain low and central banks are likely to cap yield increases to accommodate the massive fiscal stimulus.
The balance of risks remains tilted to the downside. We see a 25% likelihood of a credit crisis.
The risk of "stagflation" has increased given unprecedented fiscal stimulus and potential debt monetisation.
Tags
economicoutlook covid19 corona
Economic Outlook
Watch out for paradigm shifts
SEE ALSO FORMER ECONOMIC OUTLOOKS
Publication
Economic and financial risk insights - Vaccine roll-out and stimulus herald cyclical recovery
11 Feb 2021
Publication
US economic outlook - vaccinations and fiscal stimulus to drive a robust recovery
10 Feb 2021
Publication
Economic and financial risk insights - vaccination-led recovery on stronger footing in the US than Europe
14 Jan 2021
Publication
US economic outlook - medical and political developments strengthen growth outlook
13 Jan 2021
Publication
Economic and financial risk insights - 2021: a year of global recovery and the start of redistributive policies
10 Dec 2020
Publication
US Economic Outlook – Positive developments on vaccine front will support growth in second half of 2021
04 Dec 2020
Publication
Economic and financial risk insights - vaccine cure around the corner but formidable challenges persist
12 Nov 2020
Publication
US Economic Outlook – Split government and third wave of COVID-19 likely to curb growth in 2021
09 Nov 2020
Publication
Economic and financial risk insights - Entering a more subdued recovery phase
08 Oct 2020
Publication
US Economic Outlook – More fiscal stimulus is warranted as long as restrictions continue in place
05 Oct 2020
Show previous slide
Show next slide