Munich Re’s Economic Research team predicts ongoing challenges for the global economy, citing prolonged geopolitical tensions and evolving macroeconomic trends as key factors driving heightened uncertainty.
The analysis suggests that the interplay of structural shifts, such as deglobalization, demographic changes, decarbonization, and digitalization, will shape a decade of slower economic growth and elevated inflation.
According to the report, global economic growth is expected to average 2.5% annually from 2025 to 2034, compared to 3.1% between 2010 and 2019. In industrialized nations, inflation is projected to average 2.2% over the same period, up from 1.5% in the earlier decade.
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The anticipated slowdown reflects significant transformations in global megatrends. Factors such as globalization and demographic dynamics that previously boosted economic growth and moderated inflation are undergoing fundamental shifts. Munich Re highlights four major trends that are likely to influence economic performance in the coming years.
First, deglobalization, characterized by weaker international trade and reduced cross-border integration, is expected to constrain economic growth and exert upward pressure on inflation. Second, the shift toward a net-zero emissions economy may initially suppress growth while contributing to higher prices.
Third, aging workforces and resulting labor shortages in many industrialized economies are projected to drive wage increases and further restrict growth. Digitalization, in contrast, is identified as a potential bright spot, with the potential to enhance productivity, stimulate growth, and mitigate inflationary pressures.
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While the report outlines a baseline scenario, it also warns of a risk scenario in which the megatrends have significantly adverse effects, leading to markedly higher inflation in industrialized economies. Policymakers are advised to foster conditions that promote economic growth, particularly by leveraging productivity gains from digitalization.
The implications of these trends extend to the insurance industry, which faces the challenge of managing prolonged inflation risks, especially for long-tail lines of business such as third-party liability.
However, the report also notes opportunities for insurers, particularly in digitalization-driven risk transfer solutions, including cyber insurance.
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