The extreme heat and drought affecting large parts of Europe this summer could erase much of the economic growth expected across the region, Dutch bank Triodos said in a report on Saturday. The bank, which specializes in financing environmentally and socially sustainable projects, estimates that heat-related disruption could shave around 1% off the European Union's gross domestic product, equivalent to roughly €180 billion ($208 billion) in economic losses, driven primarily by weaker labor productivity. Labor productivity losses alone could cut EU GDP by around 0.6%, while agricultural output is expected to fall by 3% to 7%. "Higher food prices, constrained power generation and higher electricity prices, and disruption to roads, rail and inland waterways add to the damage," Triodos said. France is expected to be the hardest hit, with recurring heatwaves reducing GDP by around 1.4% and potentially tipping it into an annual contraction of 0.6%. Italy, Spain and Belgium also face substantial losses, while countries such as Poland, which experienced fewer exceptionally hot days, are expected to be less affected. The European Commission has forecast EU GDP growth of 1.1%, while the IMF expects the euro area to grow by around 0.9%.
