The world economy gained resilience in 2023, according to the most recent sigma report from the Swiss Re Institute, entitled Resilience Index 2024: encouraging resilience gains, but more is needed. 

“Uncertainty is elevated globally and unforeseeable shocks beyond baseline scenarios are more frequently impacting economies at both macro and micro levels than in theinte past. As a result, we believe it is vital to understand what drives risk absorption, the contribution of insurance and the actions we can take to strengthen resilience,” the institute’s researchers write. “Our macroeconomic resilience index captures the extent to which an economy can withstand a shock such as a recession.” 

Monetary policy 

Globally, they say macroeconomic resilience improved in 2023, increasing by seven per cent year-over-year, fully recouping all losses incurred during the COVID-19 pandemic and recession in 2020. “The primary driver was greater monetary policy headroom, as inflation in many economies declined while central banks kept interest rates elevated.” 

They add that advanced economies’ resilience increased 11 per cent while emerging economies’ resilience was flat.  

In Canada, the country jumped from 10th place in the institutes’ resilience rankings in 2022 to fourth place in the index ranking of 31 countries, thanks to higher resilience scores in most categories, offset by lower resilience scores in financial market development, human capital and economic complexity.  

“Macroeconomic resilience, the ability of an economy to withstand shocks and recover promptly, is a critical concept in today’s volatile economic environment,” they write.  

Going forward, they expect global macroeconomic resilience to increase by only one per cent, as monetary and fiscal resilience decline – monetary resilience is expected to decrease by three per cent while fiscal resilience declined by five per cent. 

“We expect the medium-term outlook for macroeconomic resilience to be more challenging,” they add. The report goes on to say Swiss Re is calling for slightly lower GDP growth and higher inflation on average in the coming years. “We expect global real GDP growth to average 2.6 per cent through 2031, 0.4 per cent lower than the average prior to the COVID-19 pandemic in 2019 and inflation to average 3.3 per cent, 0.7 per cent higher than the pre-COVID-19 average.”