Despite relatively resilient growth this year, Swiss Re Institute expects the world economy to grow by just 1.7 per cent in real terms next year as inflationary recessions approach major economies.

Upside risk

Having last year flagged inflation as the number one immediate macro concern, Swiss Re Institute continues to see upside risk in the next two years and expect it to prove sticky.

With it, the reinsurer downside risks to see growth from higher central bank interest rates. In advanced markets it forecasts real GDP growth of just 0.4 per cent in 2023, the lowest since the 1980s, outside the global financial crisis and COVID-19.

In emerging markets, Swiss Re anticipates substantially lower growth rates than pre-pandemic that will likely feel akin to recession.

The higher interest rate environment is repricing risk in financial markets and the group see this continuing.

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