Extreme heatwaves are directly affecting key economic indicators, including inflation and GDP growth. This warning was issued by the Vice-Chairman of the Supervisory Board of the European Central Bank (ECB) Frank Elderson, reports Bloomberg.
Extremely high temperatures have been established in southern and western Europe since the end of June. In particular, on June 28, Huelva in Spain broke its June record - meteorologists recorded a temperature of 46 degrees Celsius. Some European nuclear power plants reduced electricity production due to outages, and the Swiss Beznau nuclear power plant reduced its production due to outages. Due to the heat, the operation of both power units was completely suspended.
„If we look back at the extremely hot summer of 2022, food inflation rose by 0.4-0.9 percentage points and Germany's GDP took a significant hit“, Elderson emphasized. „So these climate factors are quite significant.“ He added that the ECB continues to study the impact of extreme temperatures in 2022 on inflation and GDP to forecast further developments. Global warming potentially threatens price stability, in part because it makes it harder to grow crops and food prices are rising, notes Bloomberg.
The ECB is stepping up measures to combat economic risks related to climate change. Now, when forming monetary policy, not only the consequences of climate change will be taken into account, but also the state of the natural environment as a whole, the agency writes.