Asia is expected to be the main contributor to global economic growth in the coming years, according to Swiss Re Institute’s latest sigma report. Swiss Re forecasts emerging Asia to grow by 5.4 per cent in 2023/24 while inflation remains the top global macroeconomic concern. ‘Non-life premiums in emerging Asia are forecast to expand by 6.7 per cent and 6.2 per cent by 2023 and 2024, respectively’, it adds. Global economic growth is largely supported by emerging Asian markets, including countries such as India, Thailand, Indonesia and Malaysia which are set to boom in the coming years. Given the reopening of China's economy from lockdowns in December last year, the report forecasts the country to be one of the few countries to register stronger growth this year than in 2022. Commenting on China’s growth, Li Xing, head of insurancemarket analysis at Swiss Re, says: "In prior episodes of recovery in China, growth was mostly investment-led but we expect it to be driven by domestic consumption this year, especially from the service sector. “Hence, higher demand in China does not reverse our baseline outlook of global disinflation. This year's recovery in China will have limited spillover impact on the global economy," Swiss Re also forecasts global insurance premiums to grow by 1.1 per cent in 2023 and 1.7 per cent in 2024, despite economic slowdown. The report cites that industry profitability will come from ‘rate hardening in property and casualty, improved combined ratios and stronger investment returns due to higher interest rates.’ The US is the largest insurance market in the world with total premiums of close to US$3 trillion in 2022, according to sigma data. China is the second largest market with premium volumes of $698 billion. The UK moved up to third place last year with premiums of $363 billion (£310 billion GBP), switching its fourth place position with Japan. Jérôme Haegeli, group chief economist at Swiss Re's, comments: "With inflation pressures still persistent, hard market conditions in non-life business are set to continue as insurers offset elevated claims costs with higher premium prices. Once disinflation takes hold with prices decreasing, less expensive claims and greater returns from interest rate-sensitive investments should further support industry profitability.”
