NGFS publishes a report on the macroeconomic and financial impact of extreme weather events

An unprecedented evidence base from central banks and supervisors

This report is underpinned by a unique and unprecedented dataset: a collection of 31 case studies across 28 countries, describing the economic and financial impacts of extreme weather events between 2015–2025, shared by NGFS members and observers.

This exercise marks a major step forward in the evidence base available to policymakers, both in scope and in granularity. The sample spans advanced, emerging and developing economies - including small island states - and covers a wide range of hazards, from floods and droughts to storms, cyclones and wildfires.

Case studies illustrate the variety of transmission channels through which extreme weather events affect the economy and financial systems

The report provides new empirical insights into how extreme weather shocks materialise and propagate across different economic and financial systems. It also highlights the wide dispersion of outcomes: estimated annual GDP impacts range from 0.03% to 57%, reflecting differences in exposure, economic structure and resilience.

The case studies consistently show that extreme weather events affect output, employment and prices. Inflationary effects can be significant, reaching up to 17 percentage points in some cases. The analysis also highlights the role of international spillovers, through trade, global value and supply chains as well as financial linkages.

A first step towards better measuring the economic and financial consequences of extreme weather

Extreme weather events provide a striking and tangible illustration of the materialisation of physical risks, but they capture only part of the picture, as they only reflect their acute impacts. Moreover, NGFS scenarios show that both acute and chronic physical risks are expected to increase over time. This underscores the importance of developing forward-looking risk management approaches to better measure and anticipate the magnitude of future impacts. In the long run, reducing the impacts of extreme weather events will require limiting global warming.

Quote from Sabine Mauderer, Chair of the NGFS and First Deputy Governor of the Deutsche Bundesbank

“Extreme weather events are increasingly affecting economies and financial systems around the world. This report provides new evidence on how these shocks can impact growth, jobs, prices and financial stability. By bringing together experiences from a wide range of countries, the report strengthens our understanding of the economic and financial consequences of climate change. As climate risks intensify, central banks and supervisors need to continue improving how they assess these risks and support the transition to a more sustainable future.”

To read the full report, please click here.

About the NGFS

The Network for Greening the Financial System (NGFS), launched at the Paris One Planet Summit on 12 December 2017, is a group of central banks and supervisors, which on a voluntary basis is willing to share best practices and contribute to the development of environment and climate risk management in the financial sector, and to mobilize mainstream finance to support the transition toward a sustainable economy. The NGFS brings together 152 central banks and supervisors and 24 observers. The NGFS Chair is Sabine Mauderer, First Deputy Governor of the Deutsche Bundesbank, and its Vice Chair is Fundi Tshazibana, Deputy Gouvernor of the South African Reserve Bank and CEO of the Prudential Authority. The Secretariat, headed by Yann Marin, is provided by Banque de France.

For more details, visit the NGFS website, Linkedin and 2024 Annual Report or contact the NGFS Secretariat at Banque de France sec.ngfs@banque-france.fr

Press Office at the Banque de France: +33 (0) 1 42 92 39 00/ presse@banque-france.fr