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 follows in third place with an estimated reduction in gross domestic product (GDP) of 20 billion euros.
Productivity drops in high heat
The economic losses include production losses and lower value creation. Reasons include declining work productivity, longer breaks and more absenteeism. Across Europe, the losses are likely to add up to almost half a percent of the economic output expected for this year.
For the "Climate Risk Tracker", which was calculated for the first time, economists and experts from the international credit insurer Allianz Trade in Hamburg and the German property insurance company evaluated weather and damage data and modeled the expected economic consequences.
In addition to the heat-related losses, there is also direct damage caused by storms, floods and other natural events. For Germany, Allianz estimates this damage at 50 billion euros over the past five years.
Germany is particularly hard hit by natural disasters
The annual damage was on average twice as high as in the comparable period from 2000 to 2019. According to Allianz, global damage from natural disasters increased by 54 percent. “Germany is particularly hard hit by climate-related damage,” said Frank Sommerfeld, head of property insurance.
A key reason is that Europe has warmed more than other continents due to its location in northern latitudes. Norway is at the top of the affected countries. According to the information, the average temperature there in 2025 was a good 3.7 degrees above the average for the years 1950 to 1970. Germany and France were in the upper midfield with an increase of a good two degrees.
However, the amount of damage caused by natural disasters does not solely depend on the severity of the natural events. In densely populated countries with high economic power, the damage is often higher than in sparsely populated regions. There are more factories, homes, cars and other tangible assets there.
“El Niño” could also put a strain on the economy
The experts at Europe's largest insurer are not very confident about the coming year either. The reason for this is, among other things, the weather phenomenon “El Niño”. The warming of water temperatures in the Eastern Pacific, which occurs every few years, can affect the weather even in distant regions.
The World Meteorological Organization (WMO) therefore expects above-average temperatures in large parts of South America, southern Africa and Australia. There could then be less rain than usual on the Indian subcontinent and parts of Central America.
If it were to be very warm again in 2027 as a result of an "El Niño" event, this could reduce economic output in the 144 countries examined worldwide by 392 billion euros. According to the study, China would probably be most affected.
