Swiss Re: Latin America 2022, a long road to recovery
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Swiss Re: Latin America 2022, a long road to recovery

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COVID-19 hit Latin America harder than any other region last year, with output declining (7%) more than during the global financial crisis of 2008-09. Weak economic resilience following years of low growth and structural issues prior to the pandemic will weigh on region-wide recovery and undermine countries' ability to absorb future economic shocks. GDP levels are expected to return to pre-pandemic levels by the end of 2022, which would translate into three years' worth of lost growth.

The recent Latin America market report from the Swiss Re Institute forecasts that gross domestic product (GDP) growth in Latin America will bounce back by 5% in 2021.

Insurance markets in Latin America – and globally – have been more resilient to pandemic fallout than initially expected. The report forecasts a regional real premium growth to rebound to 4.4% in 2021, after contracting by 3.4% in 2020. A rebound to 3.6% growth in Life and Health (L&H) premiums in the region in 2021 is expected, after a decline of 4.1% in 2020. Increased risk awareness should support demand, particularly for risk protection products. It also expects a strong recovery in Property and Casualty (P&C), including specialty line premiums, to 6.8% growth in 2021(vs - 4.1% in 2020). This will be driven by rate hardening in commercial lines.


  • GDP growth (in real terms) in Brazil is expected to rebound to 3% in 2021 and 2.5% in 2022, after a 4.1% contraction in 2020. Massive fiscal and monetary stimulus last year helped the country better cope with the crisis than its peers. However, the COVID-19 health crisis can continue to weigh on consumption and undermine the recovery.

  • Inflation expected to accelerate to 5.1% in 2021, above the central bank target of 3.75%, despite a considerable output gap. In an environment of persistent high inflation, currency weakness and deteriorating public finances, the central bank has already turned more hawkish this year, we expect the central bank will raise rates from 2% to 5% by the end of the year.

  • We forecast total premium growth (P&C and L&H) of almost 3.5% in real terms in 2021 and by 3.8% in 2022. Personal lines will be shaped by the recovery in economic activity and employment, and rate hardening will additionally support commercial lines.


  • Colombia's GDP is expected to increase by 5.4% in 2021 and 4.1% in 2022, following a contraction of 6.8% in 2020, the first decline in more than two decades. Improving domestic demand and significant monetary stimulus should support the recovery. The recent surge in oil prices, the country's main export, bodes well, while an improving labour market will boost household incomes. However, increasing numbers of COVID-19 cases and renewed mobility restrictions since the start of the year, combined with delayed vaccine rollout, could slow recovery.

  • With well-anchored inflation expectations and still weak economic activity, the central bank is likely to keep rates unchanged at 1.75% in the near-term. But tighter global financial conditions could trigger early hikes to prevent large capital outflows.

  • We forecast total premiums (P&C and L&H) to expand by 5.2% in real terms in 2021 and by 5.7% in 2022, on the back of a recovery in economic activity and insurance demand.


  • Economic growth in Mexico is expected to bounce back to 5% this year and 3% in 2022, after declining by 8.5% in 2020. The main driver will be the industrial sector, as a strong recovery in the US increases demand for Mexico's manufacturing exports.

  • Inflation expected to accelerate to an average of 4.5% in 2021, slightly above the 4% upper bound of the central bank's target range. With inflationary pressures, widening bond yields and exchange rates volatility, we expect the central bank to keep rates unchanged at 4% until 2022. However, there is the chance of earlier-than-expected interest hikes, just as in some other large emerging markets (eg, Brazil, Turkey, Russia).

  • We forecast total premium growth (P&C and L&H) just shy of 6% in real terms in 2021 and 4.3% in 2022 due to the 2020 base effect and economic recovery from there.