In its latest outlook, Swiss Re said global economic growth is slowing as the effects of tariffs become more visible, with US labor market data indicating early signs of weakening.
In July, nonfarm payrolls rose by 73,000 jobs, while downward revisions totaling 258,000 reduced the three-month moving average of job gains to 35,000. The firm expects further softness in employment as labor demand eases.
Despite this, US real GDP expanded by 3% in the second quarter, boosted by trade-related factors, prompting Swiss Re to raise its full-year 2025 growth forecast by 0.2 percentage points to 1.7%. The pace of expansion is still expected to slow below trend in the second half of the year.
Swiss Re previously projected total global insurance premiums to grow 2% in 2025, easing up to 2.3% in 2026. Non-life premiums are forecast to decelerate from 4.7% in 2024 to 2.6% in 2025, while life insurance growth is seen dropping from 6.1% to 1% this year, before rising to 2.4% in 2026.
Furthermore, Swiss Re expects US GDP to remain above its long-term potential of 1.9% in 2025 despite tariff pressures, suggesting underlying resilience in the domestic economy.
The reinsurer also forecasts a gradual adjustment to the tariff-driven environment starting in 2026, with US GDP projected to rise to 1.8%, supported by a stabilizing labor market.
Swiss Re projects US consumer price index inflation to average 2.8% annually in both 2025 and 2026. While the first half of 2025 saw services inflation ease, the firm expects tariff-related pressures to lift goods prices in early 2026.
In June, headline CPI rose 2.7% year over year, and core CPI increased 2.9%, with higher prices for appliances and furnishings pushing core goods inflation to 0.6%. In the euro area, the July flash Harmonised Index of Consumer Prices remained at the European Central Bank’s 2% target, with persistent services costs balanced by the stronger euro and cheaper goods redirected from Asia.
China’s inflation returned to slightly positive territory in June, with CPI up 0.1%, Swiss Re reported. However, producer prices stayed deeply negative, signaling continued weakness in domestic demand.
In its interest rate outlook, Swiss Re said the US Federal Open Market Committee kept the federal funds rate unchanged at 4.25%–4.50% in July, though two policymakers dissented. The firm expects two rate cuts later in 2025 as economic data continues to weaken, pushing the 10-year Treasury yield toward 4.2% by year-end.
The European Central Bank paused its easing cycle in June after cutting rates by 100 basis points since January, with one more cut expected before year-end and Bund yields near 2.7%.
Swiss Re added that the People’s Bank of China kept its seven-day reverse-repo rate at 1.4% in July, leaving room for further cuts. The 10-year Chinese government bond yield remains around 1.7%. Overall, the firm said global growth is slowing gradually, with US inflation set to accelerate into early 2026 while disinflation continues in other regions.
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