Europe’s extreme heat could wipe out EU growth in 2026, Triodos bank says

THE extreme heat and drought affecting large parts of Europe this summer could erase much of the economic growth expected across the region, Dutch bank Triodos said in a report on Saturday (Aug 8).

The bank, which specialises in financing environmentally and socially sustainable projects, estimates that heat-related disruption could shave around 1 per cent off the European Union’s gross domestic product, equivalent to roughly 180 billion euros (US$208 billion) in economic losses, driven primarily by weaker labour productivity.

Labour productivity losses alone could cut EU GDP by around 0.6 per cent, while agricultural output is expected to fall by 3 per cent to 7 per cent.

“Higher food prices, constrained power generation and higher electricity prices, and disruption to roads, rail and inland waterways add to the damage,” Triodos said.

France is expected to be the hardest hit, with recurring heatwaves reducing GDP by around 1.4 per cent and potentially tipping it into an annual contraction of 0.6 per cent.

Italy, Spain and Belgium also face substantial losses, while countries such as Poland, which experienced fewer exceptionally hot days, are expected to be less affected.

SEE ALSO

German industry output at risk as heat wave dries up Rhine river

Europe recorded 10,000 excess deaths during late-June heatwave, data show

Western Europe records hottest June on record, EU scientists say

Asean Intelligence

Get insights into businesses across South-east Asia

Get the free report

The European Commission has forecast EU GDP growth of 1.1 per cent, while the IMF expects the euro area to grow by around 0.9 per cent. REUTERS