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Economic Impact of Floods and Heat Waves

The European Commission has admitted the economic impact of extreme weather events, such as heat waves and floods, in southern European countries such as Portugal, particularly for tourism, and calls for measures to combat climate change.

“Of course, there is an impact on the economy, and the impact is direct. People are affected, territories are affected, there are costs of rebuilding entire areas in different countries, and then there are various indirect impacts on the economy, depending also on the areas that are affected and their characteristics, and this has affected several European countries,” said the European Commissioner for the Economy, Paolo Gentiloni.

Speaking at a press conference in Brussels and responding to a question from a Lusa reporter, Paolo Gentiloni explained that, “recently, Portugal, Italy, Slovenia, Greece, but in the recent past, Belgium, Germany, and other countries” have been affected by phenomena such as heat waves conducive to forest fires and floods caused by high levels of precipitation, among others things.

“So this is a challenge for us. We have funds available; we have a European reaction mechanism that works well, like the Civil Protection Mechanism, but the accentuation of this problem is something that we have to solve, it is not something that I can solve with a few words,” said Paolo Gentiloni.

He warned: “If we mention climate risk as a potential macroeconomic risk to the economy, we should take it very seriously.”

The European Commission released economic forecasts for the whole of the euro area, the European Union (EU), and the six largest EU economies (not including Portugal), at a time of contained growth in Gross Domestic Product (GDP) and slowing inflation.

In the document, Brussels warns that “the growing climate risks, illustrated by extreme weather conditions and the unprecedented forest fires and floods in the summer, also weigh on the outlook.”

“The materialisation of these risks entails serious costs for the EU economy, in terms of losses of natural capital and deterioration of economic activity, including tourism.”

Still regarding Portugal, and when asked about the housing crisis in the country, Paolo Gentiloni pointed out that the previous economic forecasts, released last May, already contained “the issue of housing considered among the difficulties. This is, I think, something that the [Portuguese] authorities are well aware of,” he said.

The “very weak” economic activity of recent months in the euro area and the EU, which is expected to continue, has led the European Commission to revise the projections for economic growth in 2024 to 1.3% and 1.4%.

Samantha Gannon

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