This demonstration of stagflation will have a particularly negative impact on import-oriented countries. “Many developing countries heavily dependent on food imports are now even more vulnerable to food insecurity,” the report says.
The baseline forecast of the Swiss Re Institute lies in “temporary stagflation”, when the economic slowdown is unlikely to provoke an increase in inflation but, on the contrary, will lead to its reduction.
Property and casualty (P&C) insurers are most exposed to an inflationary shock that will increase claims. “If there is a positive side to this crisis, it is that we are seeing acceleration in moving away from extreme monetary policy. The paradigm shift towards higher returns is a long-term positive for insurance companies,” the report says.
Photos are from open sources.