Economic Impact of Rising Temperatures: A Looming Crisis Threatens Global Prosperity

Temperatures have reached unprecedented levels in most regions of the world, amidst the United Nations' declaration that July is the hottest month ever recorded. The primary culprit here is climate change, which in turn poses further long-term burdens and challenges, particularly on economic activity.

This leads to a reshaping of economies, driven by the impact of such high temperatures on work and productivity, and consequently on overall economic development. Even more so, the severe heat's effect on various economic sectors is notable.

One of the main reasons high temperatures pose an economic threat is that they make work more difficult, as elevated temperatures often coincide with decreased productivity.

High temperatures also impact the safety and health of workers, increasing the risks of heat-related injuries and illnesses, necessitating slower work, more breaks, reduced work hours, all of which diminish productivity, directly affecting living standards.

These harsh temperatures affect individuals, their families, companies, and entire communities in varying degrees, with potentially stronger impacts in weaker economies, even undermining local economic output.

Addressing poverty and promoting development will become more challenging, thus hindering the achievement of most United Nations Sustainable Development Goals, related to poverty, food security, health, decent work, economic growth, and inequality reduction.

This, in turn, may leave lasting scars on the global economy, and according to research from the University of California published in the Environmental Research Letters journal, cumulative effects of rising temperatures over time have already hindered economic growth in nearly a quarter of the world's economies.

Data reveals terrifying economic damages from climate change, as a study by Science Advances shows that globally driven heatwaves caused losses of at least 16 trillion dollars, potentially reaching 65 trillion dollars between 1992 and 2013. This burden disproportionately falls on the world's poorest and least environmentally polluting countries.

The future looks even grimmer, as Swiss Re Institute warns that the global economy could lose up to 18% of its GDP by 2050 if climate change impacts are not curbed. According to their estimates, this number could decrease to between 11 and 14% with some measures, and fall to 4% if the Paris Agreement climate goals are met.

Statistics also indicate that Europe is expected to lose around 11% of its GDP, while the United States may lose 10%. Economies in the Middle East and Africa are projected to suffer a 27.6% decline.

Asian economies will also experience a decline equivalent to 26.5% of their GDP, while China could suffer a loss of nearly 24% of its GDP under the most extreme scenarios.