Heat waves, which are increasingly common due to climate change, are slowing foreign trade worldwide, according to a study. The reason for this is that extreme heat lowers labor productivity – leading to a loss of supply and reflected in a drop in exports. This is the conclusion of a study by the Leibniz Center for European Economic Research (ZEW) and the Frankfurt School of Finance & Management.
If the average temperature in a country is 30 degrees or more within a month, the export volume decreases on average by more than three percent compared to colder months. Due to climate change, the authors of the study expect heat-related trade losses to increase in the future. According to their calculations, annual world trade between 2020 and 2039 will shrink by about 735 million dollars (about 731 million euros) compared to 2015.
“In the study, we found that the negative influence of heat on exports is especially evident where trade is preceded by labour-intensive production processes,” says Daniel Osberghaus of ZEW. Depending on the country, sectors can be affected to varying degrees.
According to the scientists, the economic effects of heat waves affect both the country with the high temperatures and the importers. “Importing countries try to compensate for the supply loss by purchasing goods from third countries. However, this often results in higher costs,” says Osberghaus.
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.