Kathmandu: Analysts at Swiss Re-insurance (Swiss Re) have warned of a global recession following the outbreak of the conflict between Ukraine and Russia.
Swiss Re expects that Europe will be largely affected by the ongoing war due to its energy dependency on Russia. The US too may see the impact on its ecomony but comparatively in a slow pace.
The global reinsurer expects that the energy price shock alone could lead to at least 1 to 2 points higher inflation and lower GDP growth in the European nations.
Global inflation is also expected to rise more and GDP to slow far more than previously anticipated this year, in addition to central bank tightening, particularly in the US.
Swiss Re further highlights the financial system impact, where market and stability risks are set to rise markedly as Russia becomes effectively ‘uninvestable’.
Energy markets have been the first conduit for the shock, with ongoing price spikes raising our global inflation and lowering our real GDP growth forecasts.
Credit relationships and inward investment in Russia are being hampered, while collateral lending implications could yet manifest, with SWIFT sanctions de jure in force from 12 March.
Further, global rating agency AM Best has already warned that the invasion of Ukraine will likely have significant fallout in the capital markets leading to impact the entire industry in the short-to-medium term.
