The COVID-19 recession is likely to be one of the deepest in many decades, but could be much shorter than a typical recession. The Swiss Re Institute (SRI) expects the recovery to be protracted given staggered lockdown exits, changes in consumer behaviour and weak initial economic resilience. Massive stimulus will provide some cushioning in the near-term, but raises questions about longer-term risks, including stagflation, which would be a toxic scenario for (re)insurers. But paradigm changes could also give rise to great opportunities for the industry. With many things still unknown, scenario-thinking is more important than ever.
- Astrid Frey Kaufmann, Chief Macroeconomist EMEA, Swiss Re Institute