EU Risks Losing 1% of GDP to Extreme Heat, Study Says

South Asia, Including Bangladesh and India

Heat Erases Labor Equal to 31 Million Full-Time Jobs Each Year

Record heat waves and heavy rainfall around the world this year are inflicting widening economic damage. Lower agricultural output, higher energy costs and logistics disruptions are amplifying the fallout.

The European Union stands to lose 180 billion euros this year because of extreme heat, according to an Aug. 30 study by Triodos Bank of the Netherlands. That would amount to 1% of the bloc’s gross domestic product, enough to wipe out most of this year’s projected 1.1% economic growth.

Europe recorded its second-hottest June on record this year. Western European countries in particular set new temperature highs. In Germany, temperatures exceeded 40 degrees Celsius for three straight days at 46 monitoring stations in late June. Spain also faced prolonged heat above 42 degrees Celsius.

The heat wave has compounded damage across the economy by fueling drought and wildfires. Reuters reported a mix of losses including train delays, lower farm output and rising cooling costs for factories. More recently, water levels on the Rhine River, one of Europe’s main commercial waterways, fell to record lows, disrupting logistics.

The actual toll may be even higher because heat-related deaths are not fully reflected in the estimate. The Guardian reported that at least 35,000 more people than usual are believed to have died across Europe in August.

Asia is under similar strain. In South Asia, including Bangladesh, India and Nepal, extreme heat wipes out labor equivalent to 31 million full-time jobs each year, the World Bank says. High temperatures reduce productivity in existing jobs and curb investment that could create new ones. If the damage accumulates, South Asia’s economy could contract by 7% by 2050.

Heavy rain and flooding are also causing major losses. In China, parts of Hunan province were hit by a record 146 millimeters of rain in one hour in May. Nationwide flood damage in China reached $2.8 billion that same month. In central and western Honshu, Japan, more than 300 millimeters of rain fell in 24 hours on Aug. 30, the heaviest such total since records began.

Han Myeong-hyeon, Hankyung.com reporter wise@hankyung.com