Heatwaves threaten economic growth in Europe and beyond, Allianz warns
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Heatwaves and climate change are projected to inflict severe damage on both global and national economies, with Germany facing potential losses of up to €1 trillion by 2050.
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A man squints at the sun during a heat wave on Tuesday, June 24, 2025, in New York. (AP Photo/Olga Fedorova)
Extreme summer temperatures sweeping across Europe and parts of the globe are expected to significantly impact economic performance, according to a new study from Allianz Research on Thursday, estimating that the recent bout of heat could shave off as much as half a percentage point from Europe's economic growth in 2025.
Southern European nations face the sharpest setbacks, with Spain potentially seeing a 1.4 percentage point drop in GDP due to summer temperatures nearly 10°C above average, while Germany is projected to experience a far smaller impact of just 0.1 percentage points.
Allianz draws a striking comparison: "a day with temperatures above 32 degrees Celsius" has an economic cost akin to "half a day of strikes."
However, the effects are not confined to Europe, the report notes, projecting a 0.6 percentage point drop in global GDP this year due to rising heat. Countries such as China, Italy, Spain, and Greece are each expected to lose nearly a full percentage point of economic output, while the United States could see a 0.6 percentage point decline and France up to a third of a point.
The International Labour Organization estimates that by 2030, heat stress could slash 2.2% of total global working hours, especially in sectors like agriculture, construction, and manufacturing.
Climate cost
These findings follow a 2023 German government-commissioned report, which estimated climate-related damages could cost Germany nearly €1 trillion by 2050 under a high-impact scenario without adaptation. The same report documented that Germany has already incurred €145 billion in climate damages between 2000 and 2021, with €40 billion tied to the devastating floods of 2021 alone.
More broadly, a 2024 study by economists Adrien Bilal and Diego Känzig found that a 3°C rise in global temperature by 2100, a likely scenario if emissions remain unchecked, could reduce global output, capital, and consumption by over 50%, likening the economic damage to "fighting a war domestically and permanently." According to Bilal, people could end up "50% poorer than they would’ve been without climate change."
Read more: West's climate proxy war: energy colonial diktats on poor nations
Despite the dire warnings, Allianz maintains that the worst can be avoided, arguing that "productivity losses due to heat can be mitigated," while calling for urban redesign, better infrastructure, and workplace adaptation as essential measures to confront the economic toll of a warming planet.
