Germany is set to face as much as €25 billion in lost output from the 2026 heat wave, a new joint study from Allianz and Allianz Trade has found.
The study, the Allianz Climate Risk Tracker, assessed the level to which heat waves have contributed to economic losses across Europe, through lower labour productivity, longer breaks and absences, and infrastructure impacts.
“Heat is a widely underestimated risk,” commented Frank Sommerfeld, CEO of Allianz Insurance AG. “It puts a strain on people, infrastructure and the economy alike, and exacerbates many existing dangers such as drought, forest fires and extreme weather.”
Over the past five years, total economic losses from extreme weather events in Germany have totalled around €50 billion, which is almost twice the annual average recorded between 2000 and 2019.
Insured losses rose by 80% to almost €17 billion annually, compared an average 76% increase globally. Around 33.5% of Germany’s economic losses were insured during this period.
‘Germany is currently not adequately prepared for heat waves,’ the study noted. ‘Consequently, the effects are a greater economic factor here than in many other European countries.’
Across all countries studied, heat-related economic losses are estimated at €113 billion, with Germany the second hardest-hit in Europe, behind Italy at €28 billion and ahead of France at €20 billion.
El Niño impact
Elsewhere, the joint study also explored the potential economic effects of a strong El Niño, based on observations taken during the previous 2023/24 El Niño event.
Across 144 global economies, it found, El Niño could result in around €392 billion ($451 billion) in lost economic output next year, with China, the US and India accounting for almost 60% of the gross losses.
In Europe, meanwhile, the 27 EU member states would face losses of around €21 billion ($24 billion) from El Niño specifically, equivalent to around 0.9% of GDP.
It would likely have a 0.31-percentage-point effect on overall inflation, and a 0.5-percentage-point impact on food prices.
Adaptation measures
According to Allianz and Allianz Trade, adaptation measures such as early-warning systems, risk mapping, forward financing and clear responsibilities will need to be ramped up to mitigate the impacts from El Niño, heat waves, and future extreme weather events.
“The heatwave summer of 2026 shows how quickly things can change,” added Hazem Krichene, senior climate economist at Allianz. “It is therefore crucial to invest in adaptation and prevention in a timely manner.
“Ongoing prevention, forward-looking financing, and clear lines of responsibility make more economic sense than ever-increasing expenditures for repairing damage that has already occurred.” Read more here.
