KUALA LUMPUR (April 23): Malaysia has been listed among several nations that would each see an economic growth 20% below what they could otherwise expect by 2050 if the increase in global temperatures is held to 2°C.
In a report yesterday, The Wall Street Journal (WSJ) said rising temperatures are likely to reduce global wealth significantly by 2050 as crop yields fall, disease spreads and rising seas consume coastal cities, a major insurance company warned yesterday, highlighting the consequences if the world fails to quickly slow the use of fossil fuels.
Citing a report from Swiss Re, one of the world’s largest providers of insurance to other insurance companies, the WSJ said the effects of climate change can be expected to shave 11% to 14% off global economic output by 2050 compared to growth levels without climate change.
That amounts to as much as US$23 trillion (about RM94.59 trillion) in reduced annual global economic output worldwide as a result of climate change, it said.
The WSJ said some Asian nations could have one-third less wealth than would otherwise be the case, the company said.
Patrick Saner, who is in charge of global macroeconomic forecasts for Swiss Re, was quoted as saying: “Our analysis shows the potential costs that economies could face should governments fail to act more decisively on the climate.”
Meanwhile, Swiss Re chief economist Jerome Jean Haegeli said for hazards where confidence of a direct link with global warming is medium/high, such as heatwaves, wildfires, droughts and torrential rainfall, the insurance provider had adjusted its pricing model.
He said the projections could also influence investments by Swiss Re and other insurance companies, which collectively manage about US$30 trillion in assets.
If countries succeed at holding the average global temperature increase to less than 2°C above pre industrial levels — the goal set by the 2015 Paris accord, an agreement among nations to fight climate change — economic losses by the mid-century would be marginal, according to Swiss Re.
The company found that most countries’ economies would be no more than 5% smaller than would otherwise be the case.
However, Swiss Re said current emission levels are far from those targets.
Global temperatures are likely to increase as much as 2.6°C by 2050 based on current trajectories, it said.
If that happens, the US economy would be as much as 7% smaller than in a world without climate change, the report estimated.
Other wealthy Western nations, including Canada, Britain and France, could lose 6% to 10% of their potential economic output.
Swiss Re said for poorer nations, which tend to be more exposed to warmer temperatures but have less ability to adapt their infrastructure and economies in response, the consequences would be far more dire.
Even if the increase in global temperatures is held to 2°C, Malaysia, the Philippines and Thailand would each see an economic growth 20% below what they could otherwise expect by 2050, Swiss Re estimated.
At 2.6°C, each country would have one-third less wealth than would otherwise be the case.