Swiss Re upbeat about world economy

Things are looking up according to Swiss Re Keystone

Swiss Re, the world's second largest reinsurance group, expects the global economy to recover in the second half of 2002.

“In the second half 2002, we can expect to see growth return as declines in investment and consumption cease and lower interest rates and fiscal stimulus packages boost growth,” said Kurt Karl, head of economic research for the company’s North American division.

Speaking at the group’s economic forum in Zurich, Karl said inflation was firmly under control and that this meant interest rates would not have to rise.

“Core inflation will remain stable in Europe and the US while overall inflation, which includes energy and food, will actually decline.”

Better prospects for insurance industry

Swiss Re was also upbeat about the prospects for the insurance industry. Thomas Hess, head of the economic research and consulting division said the non-life sector had already started to pick up, and he expected growth to accelerate next year.

“Despite the significant amount of insurance capacity flowing into the market it will not be sufficient to fill the capacity gap created by the September 11 loss. As a result, in 2002, we can expect acceleration of growth and improvement of profits in non-life and an upswing in non-traditional insurance solutions.”

However, he added that growth in the life insurance sector had slowed down as a consequence of weak financial markets, and recovery would be slower.

Hess also pointed to an important structural challenge the industry is facing. “Efforts to improve insurers’ cost structures will have to increase. Today the need may be even greater in life insurance than in non-life, because life insurers will not benefit from the higher prices… in the non-life sector.”

swissinfo