It also believes that there will be a return to normal midway through this year’s third quarter, and that, overall, the world will recover what it lost during the crisis by mid-2022. There will, however, be major regional differences. That is what is detailed in the report Economic and Industry Outlook 2021: Outlook for the First Quarter, prepared by MAPFRE Economics and published by Fundación MAPFRE.
“Recovery to the GDP level of 2019 will come to the countries that have provided the greatest income support in 2020 and 2021. The US will come out first, followed by Brazil. The rest of the regions or countries—the EU, LatAm, and Spain—are further behind, affected by their production structure and the nature of the stimulus received,” the experts said. In fact, they believe that Spain will take the longest to recover from the crisis of all the economies in the Economic and Monetary Union (EMU). However, they highlighted that, in fact, the country’s dependence on the services industry, which will slow recovery in 2021, “will make it one of the fastest growing economies in 2022.”
Latin America has been the region affected most by COVID, due both to the weak economic response (scarce fiscal space) and the lack of public health preparation and the existing imbalances and vulnerabilities (scarce savings, external vulnerability, dependence on the raw materials cycle and the tourism industry). “It has experienced a permanent deterioration of the growth outlook, from the 3% we gave a year ago to the -8.1% expected for 2020,” the report stated. “Poverty rose from 23% to 30% of the population, with nearly 3 million SMEs folding and nearly 9 million jobs lost. Per capita growth in Latin America had stalled since 2015 and, following the current crisis, it is expected that the per capita income will recover to the 2015 level by 2025. In other words, the COVID-19 crisis will end up resulting in a lost decade for the region,” they concluded.
The Outlook report also includes premium estimates for the Spanish insurance industry. After getting through the most difficult phase of the pandemic without industry growth collapsing due to the compensation of one type of lines with others beginning in 2021, the situation of decreased uncertainty and a return to normal leading to a complete elimination of restrictions gives rise quickly to premium growth in the Non-Life Business of the insurance industry that will return to a rate near the expected long-term value (between 3.5% and 4%). This will happen beginning in the second quarter of 2021. In the Life business, the lower level of uncertainty means less dependence on financial savings (life premiums) and business shrinkage will gradually decelerate.
These outlooks are part of the more optimistic scenario that MAPFRE Economics has included in its report, which, nonetheless, it expects to come true. It also includes another somewhat more pessimistic scenario, which cannot be discarded entirely and might be complementary.
•To see the full Outlook report, click here (only available in Spanish)
