









ABOUT
RESEARCH
COUNTRIES
CAPACITY DEVELOPMENT
NEWS
VIDEOS

DATA
PUBLICATIONS
COVID-19

CLIMATE CHANGE | CLIMATE AND THE ECONOMY

Climate and the Economy

Climate change has potential to do significant economic harm, and poses worrying tail risks. It is a
global externality—one country’s emissions affect all countries by adding to the stock of heat-
warming gases in the earth’s atmosphere from which warming arises. 

The process of climate change is set to have a significant economic impact on many countries, with
a large number of lower income countries being particularly at risk. Macroeconomic policies in
these countries will need to be calibrated to accommodate more frequent weather shocks,
including by building policy space to respond to shocks. Infrastructure will need to be upgraded to
enhance economic resilience.

https://www.imf.org/en/Topics/climate-change/climate-and-the-economy 1/4
 Elsewhere, climate change can entail significant risks to macrofinancial stability. Nonfinancial
corporate sectors face risks from climate damages and stranded assets—such as coal reserves that
become uneconomic with carbon pricing—and the disruption could affect corporate balance sheet
quality.

Publications
FINANCE & DEVELOPMENT MAGAZINE:

The Economics of Climate 

December 2019

This issue of Finance & Development looks at the economic and financial

impact of climate policy choices. It points to concrete solutions that offer
growth opportunities, driven by technological innovation, sustainable
investment, and a dynamic private sector.

Learn more
(https://www.imf.org/external/pubs/ft/fandd/2019/12/index.htm)

BACK TO TOP 

Blogs

Equity
Investors
Must Pay
More
Attention
to Climate Change Physical Risk
MAY 29, 2020

https://www.imf.org/en/Topics/climate-change/climate-and-the-economy 2/4
 The damage from the 2011 floods in Thailand amounted to around 10 percent of Thailand’s GDP,
not even considering all the indirect costs through a loss in economic activity in the country and
abroad. By some estimates, the total costs of the 2018 wildfires in California were up to $350 billion,
or 1.7 percent of U.S. GDP. Every year, climatic disasters cause human suffering as well as large
economic and ecological damage. Over the past decade, direct damages of such disasters are
estimated to add up to around US$ 1.3 trillion (or around 0.2% of world GDP on average, per year).

Read more (https://blogs.imf.org/2020/05/29/equity-investors-must-pay-more-attention-to-

climate-change-physical-risk/)

Fiscal
Policies
for the
Recovery
from
COVID-19
May 06, 2020

Fiscal policies have provided large emergency lifelines to people and firms during the COVID-19
pandemic. They are also invaluable to increase a country’s readiness to respond to a crisis and to
help with the recovery and beyond.

Read more (https://blogs.imf.org/2020/05/06/fiscal-policies-for-the-recovery-from-covid-19/)

 
Top 6 Blogs on Climate Change
DECEMBER 11, 2019

https://www.imf.org/en/Topics/climate-change/climate-and-the-economy 3/4
 Actions speak louder than words. The longer we wait to act on climate change, the greater the loss
of life and damage to the world economy. Faced with the ongoing existential threat posed by
changes to our climate, the United Nations conference known as COP25 is happening in Madrid,
Spain.  Policymakers with ambition and vision can choose what to do and how to do it, right now,
globally and at home.

Read more (https://blogs.imf.org/2019/12/11/top-6-blogs-on-climate-change/)

https://www.imf.org/en/Topics/climate-change/climate-and-the-economy 4/4