LONDON Dec 11 There is a 30 percent chance of
severe recession i n Europe and the United States next year,
though moderately rising growth is the likeliest outcome,
according to the world's No. 2 reinsurer.
Swiss Re said on Tuesday its assessment reflected
the risk of failure in efforts to fix the troubled euro zone and
avoid the so-called fiscal cliff in the United States.
"The risk of a severe recession in Europe and the U.S. is
fairly high," the world's No.2 reinsurer said on Tuesday in its
annual economic outlook report.
"The key region of weakness is in the euro area."
Greece and other critically-indebted euro zone nations are
pushing through unpopular spending cuts to shore up their
creditworthiness and remain within the single currency area,
helped in some cases by international bail-outs.
In the United States, legislators are in urgent talks to
avoid tax hikes and spending cuts worth up to $750 billion that
are due to begin in January and that could hobble economic
A euro zone break-up or a failure to avert the U.S. fiscal
cliff would derail Swiss Re's baseline forecast for a moderate
increase in economic growth.
It expects the U.S. economy to expand by 2.5 percent in
2013, up from 2.2 percent this year, and predicts 0.4 percent
growth for the euro zone, compared with a 0.4 percent
contraction in 2012.
Interest rates should stay at or near their current low
levels into 2015 as central banks wait for firmer evidence of
recovery before raising borrowing costs, Swiss Re said.
That will keep up pressure on the insurance industry's
investment income, already heavily eroded in the four years
since rates were slashed to prop up economies during the 2008
However, sales should improve as the economy picks up, led
by the emerging markets of Asia and Latin America, Swiss Re
The reinsurer predicts growth in life and non-life insurance
premiums next year of 2.2 percent and 3.5 percent respectively,
up from zero and 3 percent in 2012.
(Reporting by Myles Neligan; editing by Stephen Nisbet)