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TimesLIVE
10-07-2025
- Business
- TimesLIVE
Extreme weather could cause 5% drop in eurozone GDP, bank watchdogs find
Extreme weather events such as heatwaves, flooding and wildfires could wipe as much off eurozone GDP in the next five years as the global financial crisis or the Covid-19 pandemic, a senior European Central Bank (ECB) official said on Wednesday. A series of severe weather-related events could cause an almost 5% near-term drop in eurozone growth, based on the most extreme climate scenario devised by a group of more than 140 bank supervisors and regulators earlier this year, according to Livio Stracca, deputy director-general at the ECB. 'The peak negative effect on euro area GDP is almost 5%, which is the same order of magnitude as what we have seen in the global financial crisis and a little bit less than Covid-19,' said Stracca, who also chairs the Network for Greening the Financial System's workstream on scenario design and analysis. The findings are based on a new set of tools designed by the NGFS, a group of central bankers and supervisors working to address climate-risk in the financial sector and economy. The tools aim to help banks and companies understand how climate change may impact their businesses in the short term by testing out a series of climate-related scenarios.
Straits Times
10-07-2025
- Business
- Straits Times
Extreme weather could cause 5 per cent drop in euro zone GDP, bank watchdogs find
Sign up now: Get ST's newsletters delivered to your inbox The tools aim to help banks and companies understand how climate change may impact their businesses in the short term by testing out a series of climate-related scenarios. LONDON - Extreme weather events such as heatwaves, flooding and wildfires could wipe as much off euro zone GDP in the next five years as the global financial crisis or the Covid-19 pandemic, a senior European Central Bank official said on July 9. A series of severe weather-related events could cause an almost 5 per cent near-term drop in euro zone growth, based on the most extreme climate scenario devised by a group of over 140 bank supervisors and regulators earlier this year, according to Livio Stracca, deputy director general at the ECB. 'The peak negative effect on euro area GDP is almost 5 per cent, which is the same order of magnitude as what we have seen in the global financial crisis and a little bit less than Covid-19,' said Dr Stracca, who also chairs the Network for Greening the Financial System's workstream on scenario design and analysis. The findings are based on a new set of tools designed by the NGFS, a group of central bankers and supervisors working to address climate-risk in the financial sector and economy. The tools aim to help banks and companies understand how climate change may impact their businesses in the short term by testing out a series of climate-related scenarios. The group found euro zone growth was most severely impacted in a scenario known as 'Disasters and Policy Stagnation' where heatwaves, droughts and wildfires in 2026 were followed by a combination of floods and storms in 2027. Should the euro zone follow through with its net-zero transition policies, including its plan for a 55 per cent reduction in greenhouse gas emissions by 2030, it could largely mitigate losses, another scenario found. Top stories Swipe. Select. Stay informed. World Trump's ambassador nominee to Singapore Anjani Sinha has a rough day at Senate hearing Asia Dr Mahathir at 100: Still haunted by the Malay Dilemma Singapore What's next for PSP following its post-GE leadership shake-up? Singapore 'Give a positive review': Hidden AI prompt found in academic paper by NUS researchers Multimedia 60 objects to mark SG60: Which is your favourite? Singapore Apex court upholds SMC's conviction of doctor who gave patients unapproved hormones Singapore Singaporean fugitive arrested in Thailand for suspected drug trafficking and handed over to CNB World Trump issues tariff notices to 7 minor trading partners, hits Brazil with 50% tariff 'Climate-related risks are an immediate concern for financial stability and economic growth,' Dr Stracca and Bundesbank board member Sabine Mauderer said in a blog published by the ECB on July 9. 'The NGFS scenarios ... indicate that a globally coordinated net-zero effort would safeguard the euro area's economic interests over the next five years.' The NGFS has already released a widely used set of climate scenarios, but this is the first time they have offered tools to assess the short-term and physical impacts. REUTERS
