Heatwaves, floods will have economic impact, says EC

  • Lusa
  • 11 September 2023

Several European countries, including Portugal, have been affected by phenomena such as heat waves that are conducive to forest fires, floods caused by high levels of precipitation, among others.

The European Commission acknowledged on Monday the economic impact of extreme weather events, such as heatwaves and floods, on southern European countries like Portugal, particularly for tourism, and called for measures to combat climate change.

“Of course, there is an impact on the economy, and the impact is direct. People are affected, territories are affected, there are reconstruction costs for entire areas in different countries, and then there are various indirect impacts on the economy, also depending on the areas that are affected and their characteristics, and this is something that has influenced a number of European countries,” said the European Commissioner for the Economy, Paolo Gentiloni.

Speaking at a press conference in Brussels on the day that the EU executive published its summer economic forecasts and responding to a question from Lusa, he said that “recently, Portugal, Italy, Slovenia, Greece, […] but, in the recent past, Belgium, Germany and other countries” have been affected by phenomena such as heat waves that are conducive to forest fires, floods caused by high levels of precipitation, among others.

“So this is a challenge for us. We have funds available, and we have a European reaction mechanism that works well, like the Civil Protection Mechanism, but the accentuation of this problem is something we have to solve. It’s not something I can solve with a few words,” said Paolo Gentiloni.

And he warned: “If we mention climate risk as a potential macroeconomic risk for the economy, we must take it very seriously.”

The European Commission today released economic forecasts for the eurozone and the European Union (EU) as a whole and the six largest EU economies (not including Portugal) at a time of restrained growth in Gross Domestic Product (GDP) and slowing inflation.

In the document, Brussels warned that “growing climate risks, illustrated by extreme weather conditions and unprecedented forest fires and floods in the summer, also weigh on the outlook”.

“The materialisation of these risks entails serious costs for the EU economy, in terms of losses of natural capital and the deterioration of economic activity, including tourism,” the institution concluded.

Still on the subject of Portugal, and when asked about the country’s housing crisis, Paolo Gentiloni pointed out that the previous economic forecasts, released last May, included “the issue of housing among the difficulties”.

“This is, I think, something that the [Portuguese] authorities are well aware of,” he said.

The “very weak” economic activity of recent months in the eurozone and the EU, which is expected to continue, has led the European Commission to revise its projections for economic growth in 2024 downwards, to 1.3 per cent and 1.4 per cent.

In the summer economic forecasts published today, the EU executive now predicts GDP growth of 0.8 per cent this year in the single currency area and the EU as a whole and 1.3% and 1.4%, respectively, next year.

These percentages compare with projections of 1.1% for the eurozone and 1% for the EU in 2023 and 1.6% and 1.7%, respectively in 2024, in line with the spring forecasts published last May.