Heat wave reduces European economic output by 113 billion euros

According to Allianz estimates, this summer's heat wave has reduced European economic output for the current year by 113 billion euros. With estimated losses of 25 billion euros, Germany is in second place behind Italy with 28 billion euros, as the Munich DAX group announced. France is in third place with an estimated reduction in gross domestic product of 20 billion euros.

In high heat, less work is done

Economic losses include production losses and lower added value, due to lower work productivity and longer breaks and absences. The Europe-wide losses are likely to add up to just under half a percent of the economic output expected for this year.

The economists and experts from the international credit insurer Allianz Trade in Hamburg and the German property insurance company were involved in the “Climate Risk Tracker”, which was calculated for the first time. The basis is, on the one hand, weather and damage data, and, on the other hand, the modeling of the expected economic effects.

In addition to the heat-related reduction in economic output, there is the actual damage caused by storms, floods and other natural events: Allianz estimated this at 50 billion euros for Germany over the past five years.

Storm and natural disaster losses in Germany are increasing at an above-average rate

The annual damage was on average twice as high as in the comparable period from 2000 to 2019. However, compared to the rest of the world, natural catastrophe damage has only increased by a little more than half (54 percent), according to Allianz. “Germany is particularly hard hit by climate-related damage,” said Frank Sommerfeld, head of property insurance.

A key reason is that Europe, which is located in northern latitudes, has warmed more than other continents: Norway is at the top of the affected countries. According to the information, the average temperature in the Scandinavian country in 2025 was a good 3.7 degrees higher than the average for the years 1950 to 1970. Germany and France were in the upper midfield with an increase of a good 2 degrees.

However, the forces of nature as such do not play the only role in the amount of damage caused by natural disasters. In densely populated countries with high economic power, the damage is also higher than in sparsely populated regions where there are fewer factories, homes, cars and other man-made assets.

“El Niño” also influences GDP

The experts at Europe's largest insurer are not very confident about the coming year either. The reason is the natural phenomenon “El Niño”. The warming of water temperatures in the Eastern Pacific, which occurs every few years, can influence the weather on land even in distant regions.

The UN World Meteorological Organization expects above-average warmth in large parts of South America, southern Africa and Australia. There is likely to be less rain than usual on the Indian subcontinent and southern Central America.

If 2027 is another very warm year due to “El Niño”, this could reduce economic output in the 144 countries examined around the world by 392 billion euros, according to the study. China is expected to be hit hardest.