Global economic growth is projected to slow down due to US tariff policies, according to a report by the Swiss Re Institute. The tariffs are expected to reduce trade and increase uncertainty, prompting consumers and businesses to cut spending and investments. The report forecasts global GDP growth to decelerate from 2.8% in 2024 to 2.3% in 2025, with a slight improvement to 2.4% in 2026.
Swiss Re's Group Chief Economist Jérôme Haegeli commented on the situation: "While insurers' profitability outlook is still benefiting from rising investment income, we expect tariffs to slow global GDP growth, and consequently weigh on insurance demand." He added that the US tariff policy could lead to more market fragmentation, affecting the affordability and availability of insurance.
The US economy is particularly impacted, with GDP growth expected at 1.5% this year, down from 2.8% in 2024. Haegeli noted that "US consumers will be hit hardest by US' tariff policy and cut their spending as a consequence of higher prices."
In Europe, economic activity is also affected by policy uncertainty, with unchanged growth at 0.8% this year. However, fiscal measures by Germany and interest rate cuts from the ECB may boost euro area growth next year.
China's GDP growth is anticipated to decline slightly due to tariffs and ongoing uncertainty. The Swiss Re Institute predicts China's GDP will grow by 4.7%, compared to 5% in the previous year.
The insurance industry faces challenges as well, with total premium growth slowing significantly after a strong performance in 2024. The report forecasts a drop in non-life insurance premium growth due to competition and softening market conditions.
Despite these challenges, some opportunities may arise for insurers amidst tariffs and uncertainty. Lines of business offering protection against economic disruption could benefit from heightened risk awareness.