According to a study by Allianz Trade, it is estimated that losses in gross domestic product (GDP) due to the heatwaves in Greece could amount to 1.1 percent. The impact is estimated to be even greater in Spain (a 1.4 percent drop in GDP) and Italy (a 1.2 percent drop), while in France and Germany, GDP losses are estimated at 0.3 percent and 0.1 percent, respectively, for this year.
Overall, the extreme heat is expected to negatively affect GDP in Europe by half a percentage point and by 0.6 percent globally.
“We find that China, Spain, Italy and Greece could each see GDP losses of nearly one point due to the current heatwave. The US and Romania may face a decline of around -0.6pp each, while France could lose up to a third of a point and the impact on Germany appears minimal at just -0.1pp,” the report states.
Heatwaves paralyze the economy
“Heatwaves paralyze the economy,” notes Jasmin Groschl, an economist at Allianz SE. “Overall, people work less. A day with temperatures above 32 degrees is roughly equivalent to half a day of strike. This may initially be economically manageable in individual cases, but with increasing climate change, both the frequency and intensity of such events increase. Heatwaves, droughts and fires are becoming the ‘new normal’ to which the economy must adapt to avoid serious long-term losses,” she added.
In Greece, for example, in response to extreme temperatures and high thermal discomfort levels last week, the Ministry of Labor and Social Affairs ordered a temporary suspension of certain outdoor work activities. In addition, ancient monuments, including the Acropolis, closed down during the hottest part of the day, resulting in millions of losses in tickets.
The International Labor Organization estimates that 2.2 percent of global potential working hours are lost due to heat stress—equivalent to working around 80 million full-time jobs. In 2021, according to the Lancet Countdown, 470 billion working hours were lost, a 37 percent increase compared to the 1990s average.
Workers in developing countries are most affected, due to greater exposure and poorer housing conditions. It has been observed that the capacity for physical work is reduced by 40 percent at 32°C (90°F) and reduced by two thirds at 38°C (100°F).
According to the study’s data, in Greece, between May 1 and July 14, the temperature was above 32°C (90°F) for 43 days. In Spain, it was above 32°C (90°F) for 52 days, in Italy for 44 days, and in Germany for only five days.
Allianz Trade, in its report, reported that productivity losses due to heat can be mitigated. It recommends technological, infrastructural, regulatory, and behavioral changes that can be employed by individuals, businesses, and governments.
Strategies such as optimizing work schedules, working in early morning or evening hours, and using passive cooling mechanisms are promising. Climate-aware urban planning and modifications to building design can best tackle high base temperatures, whereas air conditioning can adapt to brief temperature spikes, given adequate, affordable, reliable, and clean electricity.
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