Summary

A new IMF study analyzes the impact of different climate-related disasters on economic growth. Drawing on data for 196 countries over the period 1970–2023, the authors show that storms, floods, droughts and heatwaves reduce GDP growth on average by 0.1–0.2 percentage points, with the strongest effects observed in developing countries and emerging markets. The most severe consequences are associated with extreme events: catastrophic floods can reduce economic growth by up to 3 percentage points, while extreme droughts can lower it by around 1 percentage point. The findings also show that the negative impact of climate-related disasters often persists for several years and is not offset by a rapid economic recovery. At the same time, the damage from storms and heatwaves has declined in recent decades due to adaptation, whereas the economic losses caused by droughts continue to rise. This points to countries’ continued vulnerability to this type of climate risk.