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Climate perils costing US 0.4% of its GDP, report says

In World
February 29, 2024

ZURICH – Climate perils are already causing the United States annual economic losses of US$97 billion (S$131 billion), or 0.4 per cent of its annual economic output, according to a study published on Feb 28 by the reinsurance giant Swiss Re.

The Zurich-based group, which acts as an insurer for insurers, reaffirmed that climate change could reduce global economic output by seven to 10 per cent by 2050.

For now, the Philippines is the country suffering the highest annual economic losses from the impact of four major weather perils studied – floods, tropical cyclones, winter storms and severe thunderstorms – at three percent of gross domestic product.

“Climate change is leading to more severe weather events, resulting in increasing impact on economies,” said the Swiss Re group’s chief economist Jerome Jean Haegeli. “Therefore, it becomes even more crucial to take adaptation measures.”

To understand how insurers can assess risks, the study, based on 2022 data, took stock of the impact of the most frequent natural disasters on the gross domestic product (GDP) of 36 sample countries.

Swiss Re economists took into account the four most frequent and most expensive weather disasters.

By this yardstick, the Philippines is the hardest-hit country, followed by the United States, then Thailand with annual economic losses of 0.36 per cent of GDP, Austria (0.25 per cent) and China (0.22 per cent).

India was seventh on 0.20 per cent, with Australia eighth on 0.19 per cent and Japan 10th on 0.18 per cent.

The assessment provides a broad view of the economic implications if weather perils continue to intensify.

It does not take into account all weather risks, such as heatwaves, with Swiss Re saying it was “difficult to predict” the full impact of climate change.

Globally, the four risks studied represent around US$200 billion in economic losses each year.

Swiss Re economists said that while reducing greenhouse gas emissions was essential, it was also imperative to take measures to help stem economic losses.

Such measures could include reviewing building regulations, creating flood defence systems and discouraging building development in areas heavily exposed to climate change. AFP

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