A loss of up to 18% in global GDP could be recorded by 2050 if global temperatures rise by 3,2°C
Author: Lara-Sophie Buckow
The Swiss Re Institute carried out stress tests to analyze how climate change and global warming will affect the global economy by 2050. A total of 48 countries were analyzed, which represent 90% of the world economy. The results show that internationally a loss of up to 18% of the gross domestic product (GDP) is possible, compared to a world without global warming, if temperatures rise by 3,2°C.
Differences due to location and available resources
According to the Swiss Re Institute, emerging countries such as Malaysia, Thailand, India, the Philippines and Indonesia are particularly affected by these losses. However, even nations like China, with a loss of 24%, almost a quarter of the current GDP, would be badly affected. For countries in the northern hemisphere, the losses would be lower. This is mainly due to their location, but also to their resources. As they can quickly adapt to climatic and thus economic changes as well as mitigate the effects accordingly. Nevertheless, nations such as the USA, Canada and Great Britain would also loose 10% of their GDP, Europe even 11%.
Thierry Léger, Group Chief Underwriting Officer and Chairman of the Swiss Re Institute, emphasized: “Climate risk affects every society, every company and every individual. By 2050, the world population will grow to almost 10 billion people, especially in regions most impacted by climate change. So, we must act now to mitigate the risks and to reach net-zero targets."
Source & Copyright by Swiss Re Group
Global collaboration against global warming
In total, the Swiss Re Institute carried out 4 different scenarios for the next 30 years. If the measures and guidelines of the Paris Agreement are adhered to, and thus global warming remains well below 2°C, global GDP would only fall by 4,2%. But in order to achieve these goals, international change is required, to create change together. Because according to Swiss Re, with a temperature rise of 2°C, losses would already be at 11%. At 2,6°C even at 14%.
Jérôme Haegeli, Group Chief Economist at Swiss Re, has clear words about the results of the stress tests: “Climate change is a systemic risk and can only be addressed globally. So far, too little is being done. Transparency and disclosure of embedded net-zero efforts by governments and the private sector alike are crucial. Only if public and private sectors pull together will the transition to a low-carbon economy be possible. Global cooperation to facilitate financial flows to vulnerable economies is essential. We have an opportunity to correct the course now and construct a world that will be greener, more sustainable and more resilient."
More measures to reduce global warming are necessary
A combination of numerous measures would counteract this negative climate and economic development. CO2 emissions must be taxed higher, as well as more promotion and support for green and sustainable technologies and developments is needed. Swiss Re furthermore demands that companies should also publish and share their plans in their annual report on how they want to achieve the goals of the Paris Agreement and become climate neutral.