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Climate change to wipe 3 per cent from global economy by 2050

By Hugh Wilson

Poorer regions will be most affected but all nations will be hit, study finds

Climate change will directly cost the global economy $7.9trn (£6.1trn, €7.1trn) by 2050, according to new analysis by the Economic Intelligence Unit (EIU).

The EIU measured the resilience to climate change of 82 of the world’s largest economies, concluding that the direct effects of global warming, including drought, flooding and crop failures, would wipe three per cent off global GDP by the middle of the century.

Under this scenario, the pain would not be evenly spread. While the economies of North America and Europe would be 1.1 and 1.7 per cent smaller respectively by 2050, Africa’s economy would shrink by 4.7 per cent and Latin America’s by 3.8 per cent.

The EIU says that North America and Europe are both richer and more prepared to tackle climate change from an institutional standpoint.

But Africa, Latin America and the Middle East have higher average temperatures and smaller economies, making them more vulnerable to extreme weather events.

John Ferguson, the EIU’s country analysis director, said: “The impacts of climate change are already being felt – we are already seeing the effects of more extreme weather events – but the economic impacts will only grow over time.

“It’s important to remember that a three per cent loss of real GDP in 2050 is highly significant for the global economy, and that there will be economic losses in every year of the coming three decades.”

The EIU said its analysis could be optimistic, because the figures assume that countries make some effort to meet targets set out as part of the Paris Climate Agreement.

The organisation warned that “progress in this space and the implementation of these policies could easily disappoint” adding that the economic impacts “could be much worse than those highlighted in the EIU’s model.”

FURTHER READING: Goldman Sachs: climate change an “opportunity to unlock economic growth”

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