Swiss Re predicts virus-related recession

Global economies could fall into recession as a result of fallout from the spread of the new coronavirus, Swiss Reinsurance Co. Ltd said in a report Thursday.

The reinsurer’s “baseline scenario” foresees a global recession in 2020 with economic activity gradually normalizing into 2021, if the outbreak peaks in April and May.

A more pessimistic scenario, however, would see a more protracted recession into the fourth quarter of 2020, if the outbreak does not peak in the first half of the year, the report said.

Global real GDP growth rates will fall below 2%, with Swiss Re’s U.S 2020 growth forecast reduced by 50 basis points to 1.1%.

“We expect growth to decelerate quite abruptly across the board with a recession in Japan and the Eurozone, including Italy, France and Germany,” the report said.

“The U.S. and China are forecast to remain more resilient, even though the risk of both a U.S. recession and a China hard landing has risen to a very high 40%,” the report said.

Global stock markets fell sharply again on Thursday as investors reacted to the spread of COVID19, the disease caused by the coronavirus.

More insurance and risk management news on the coronavirus crisis here.