Economies in Asia Pacific forecast to shrink by over 2 per cent due to climate change: Study

22 November 2019 | Adaptation

The Asia-Pacific economy will shrink by 2.6 per cent by 2050 due to its inability to withstand climate change, a study found.

This is slightly lower than the global average shrinkage of 3 per cent.

The study assessed 82 countries to determine their Climate Change Resilience Index, or how their economies will be affected based on their capacity to withstand climate change.

A summary of the findings were released on Wednesday (Nov 20) by research and analysis company The Economist Intelligence Unit (EIU), which is the research arm of newspaper The Economist.

Mr John Ferguson, the EIU’s country analysis director, said that climate change will have a limited impact on Singapore’s economy even though developing countries within Asia Pacific will be affected.

“High levels of income per head, a lack of dependence on agricultural commodity exports for growth, and the Government's strong ability and willingness to intervene to mitigate the impact of climate change will alleviate related risks for Singapore to a significant extent.”

However, he said that as a small island nation, Singapore will be vulnerable to increasing floods and weather-related disasters such as changes to climate patterns and rising sea levels.

“Some supply-chain risks also exist, particularly if Singapore's imported food supplies are affected by increasing climatic volatility,” he added.



The ability and willingness of countries to confront climate change were examined in line with eight indicators:

The loss of land or physical capital due to extreme weather

The impact on public services, basic needs and government spending

The impact on agriculture

Loss of labour productivity

Tourism losses

Trade losses

Cost of adaptation to climate change

Cost to mitigate climate change



Among the seven regions assessed, researchers expect North America to suffer the least amount of real Gross Domestic Product (GDP) loss (of 1.1 per cent) by 2050.

Conversely, it found that the region which is least resilient to climate change is Africa (loss of 4.7 per cent).

The level of real GDP loss forecasted for all regions:

North America – 1.1 per cent

Western Europe – 1.7 per cent

Asia Pacific – 2.6 per cent

Eastern Europe – 3 per cent

Middle East – 3.7 per cent

Latin America – 3.8 per cent

Africa – 4.7 per cent

North America and Western Europe took the top spots because both regions are richer and more prepared to tackle climate change. They are thus likely to see the least impact economically.

Africa took the bottom spot because it faces higher average temperatures and lower levels of economic development. Policymakers there will also face challenges meeting their objectives for policies related to climate change.



Countries which are poorer and have higher average temperatures will be the most affected.

Nearly all low-income countries are tropical, increasing their exposure to global warming, the report said.

Poor quality of infrastructure and housing also make these countries less resilient to extreme weather.

Another reason: The economies of developing countries tend to depend on agriculture, which is vulnerable to climate change. A rise in temperature could lead to more competition over dwindling fertile land and deteriorating food security, increasing the possibility of social unrest.

Within Asia Pacific, developing countries such as Bangladesh will be affected by climate change the most.



While a rich country is better prepared to confront its challenges and so has an advantage in withstanding climate change, the institutional quality of a country matters as well, the report stated. This refers to attributes such as the level of corruption, the quality of the bureaucracy and the protection of property rights in a country.

Institutional quality is thus tied to a country’s initiatives to adapt to climate change, such as building flood defences. Institutional quality can also affect policies which aim to reduce carbon emissions, such as carbon taxes.

The United States is an example of a North American economy that is well-prepared to confront economic and social challenges related to climate change, the study found.

It has a well-funded research and development sector as well as strong national institutions.

It is also less exposed to geographic risks related to climate change as compared to developing countries.

The report noted that US President Donald Trump may have negative polices on climate change such as withdrawing from the Paris Climate Change Agreement, showing that strong institutions do not always facilitate climate-friendly policies, but policies can still be formed and implemented quickly when there is political will.


Source: Today Online