Source: asiainsurancereview.com

With many economies reopening, economic capacity utilisation has rebounded to above 90% of pre-crisis levels as per recent insights from Swiss Re Institute (SRI) economists.

The easing of virus containment measures was immediately reflected in a recovery in mobility and in June’s composite purchasing manager indices – all pointing to a stabilising economy. However, SRI warns that reopening has also created new challenges.

In the US, around 50% of major lockdown measures are still in place on average but a spike in new COVID-19 infections is causing several states and municipalities to pause or reverse lockdown relaxation. After narrowing significantly, the US GDP shortfall index is also widening again as lockdown easing and mobility are paused to manage a resurgence in infection.

SRI therefore sees a more moderate economic recovery. “We believe renewed virus outbreaks are likely, but tolerance for large-scale shutdowns has fallen significantly and we anticipate governments will impose more targeted local rather than national lockdowns in future,” said the institute. As a result, after the initial sharp rebound, economic recovery is expected to moderate in pace going forward with global GDP contracting by around 4% this year.