Climate change could lead to 5% drop in eurozone GDP — ECB

Livio Stracca, senior European Central Bank (ECB) official, warned that severe weather events could negatively affect economic growth across the bloc. He projected that over the next five years, GDP decline could reach levels comparable to those seen during the COVID-19 pandemic, approximately 5%.

EU financial regulators and supervisory authorities have identified threats posed by extreme heat, wildfires, and floods. After testing various climate-related scenarios, they concluded that the eurozone’s adoption of zero-emission policies could significantly mitigate losses. This strategy aligns with the EU’s plan to cut greenhouse gas emissions by 55% by 2030.

Stracca emphasized that climate-related risks could undermine both financial stability and economic growth in the eurozone. The ECB’s analysis draws on scenarios from the Network for Greening the Financial System (NGFS), which outline the potential causes and consequences of extreme weather events in the region.