Europe’s economy is threatened by extreme heat, fires and floods CNN Business

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CNN
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Rising climate risks, typified by extreme heat, wildfires and floods that have ravaged parts of Europe this summer, could hurt the region’s economy quickly this year, the European Commission warned on Monday.

In recent economic forecasts, The European Union’s governing body lowered its growth forecast for the region in 2023 and 2024. But even that dim view could prove too optimistic, he said.

“The making of things [climate] The risks carry heavy costs for the EU economy, in terms of losses in natural capital and the deterioration of economic activities, including tourism,” the commission said.

It now expects EU gross domestic product to grow by 0.8% this year, down from a 1% increase forecast in the spring. Growth for next year was revised up to 1.4% from 1.7%.

The Commission blamed weak domestic demand, dampened by high inflation, and rising interest rates for the cuts. But it added that there was “significant uncertainty” around its latest forecast, with bad weather among the “low” risks.

Tourism can account for a fifth of the annual GDP of some countries in the region. Europeans are already starting to rethink where they will travel in the future after this year’s temperatures in southern Europe and the continent’s hottest summer on record in 2022.

The European Travel Commission, an organization of tourism organizations, said in July that the number of European tourists planning to go to Mediterranean destinations this summer and autumn this year has fallen by 10% compared to the same period in 2022. Currently, the Czech Republic. , Bulgaria, Ireland and Denmark, where the climate is mild, have seen “an increase in popularity,” ETC noted.

Tourists from outside the EU may also miss out on their holidays in Italy and Greece, both of which have been battling wildfires. A spokesperson at ForwardKeys, a travel data company, told CNN in July that “there is a shift in preference for cooler and northern destinations” among UK travelers due to a heat wave in continental Europe that month.

Global warming could end tourism in another way: by accelerating the erosion of seas and increasing wildfires that tear down forests – both of which are part of Europe’s “environmental capital”, David Owen, an economist at Saltmarsh Economics, told CNN.

In a study published last October, the Bank of Italy warned that rising temperatures put at risk the growth of the EU’s third largest economy, with tourism and agriculture heavily exposed.

Sweltering temperatures have been bad news for olive trees, for the second year running, with industry experts warning of rising prices and shortages of olive oil. In Spain, the world’s largest producer of olive oil, production has already declined.

The full extent of the damage from this year’s heat will not be known until later in the harvest season in October and November, but European olive oil production could sink by 700,000 metric tons – a fall of more than 30% – compared to five years ago. average, according to Kyle Holland at market research group Mintec.

Construction and manufacturing are among the most vulnerable sectors of the economy to extreme heat, says Owen at Saltmarsh Economics.

“If you have to learn to live with temperatures reaching 40 degrees [Celsius] “For a few days at a time in southern Europe, we don’t do well in those kinds of temperatures, so that will affect the economy as a whole,” he added.

Like the European Commission, on Sunday the International Monetary Fund pointed to “serious risks to economic well-being” due to climate change.

“Members of the G20 must lead by example in achieving the pledge of 100 billion dollars a year in climate finance,” IMF managing director Kristalina Georgieva said at the 20th Summit in India.

“Countries must also mobilize domestic resources to finance and manage the green transition through tax reforms, efficient and effective public spending, strong financial institutions, and deep domestic debt markets.”