Climate Change: Drastic GDP Losses for Hungary, CEE

Global warming will not only wreak havoc on the global economy but could also result in dire economic consequences for Hungary and other countries in Central & Eastern Europe. G7 economies, for example, could lose USD 5 trillion a year, or 8.5% of their GDP by 2050, if global average temperatures rise by 2.6 degrees Celsius compared to pre-industrial levels, according to a joint analysis by Oxfam and the Swiss Re Institute. The organizations contend that economic decline will be twice as much as the one suffered during the Covid-19 pandemic.

Within this scenario, Hungary’s GDP will shrink by 8.5% by 2050. In a less pessimistic case, if global temperatures rise by only 1.5 degrees Celsius, a 3% GDP loss is to be expected in Hungary (while the global economy will shrink by 4.2%). The study also looked at the worst-case scenario, if no efforts to battle climate change are made by countries. In that case, the average temperature would increase by 3.2 degrees Celsius, which would lead to a global GDP decline of 18.1% and make for an 11.4% downturn for Hungary.

Sources: Menedzsment Forum, Guardian