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Global recession twice as deep as 2008, shorter lived: Swiss Re’s Haegeli

9th April 2020 - Author: Charlie Wood

Swiss Re’s chief economist Jérôme Jean Haegeli believes the global recession facing us in the wake of the coronavirus pandemic could be one of the deepest, but also one of the shortest.

Swiss ReAnalysis conducted by the reinsurer projects an atypical recession which will be twice as deep and more than twice as fast as the Global Financial Crisis of 2007-2008.

Haegeli expects global economic activity to contract by 1.2% in 2020, with real GDP falling 3% in the US and 4.5% in the Euro area.

The partial economic shutdown is likely to remain in place through most of Q2, assuming new infections in Europe and the US peak in April/May, followed by a gradual return to growth in Q3.

On the interest rate front, Haegeli expects government bond yields to remain low and central banks to cap yield increases to accommodate the massive fiscal stimulus, if needed.


In terms of medium-term risks, there’s a belief at Swiss Re that the likelihood of a “stagflation” has increased on the back of unprecedented fiscal stimulus and potential debt monetisation.

We just released analysis of our re/insurance survey which indicated that the majority of respondents consider investment declines and financial market health as the primary threat to the industry as coronavirus continues to unfold.

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