Cyprus is projected to suffer the most severe economic impact in Europe from heatwaves, with climate change expected to push annual losses up to 3% of GDP by 2060 if no adaptation measures are taken, according to a peer-reviewed study published in Nature Communications.
The study, which examines current and projected regional economic impacts of heatwaves in Europe, quantifies losses in labour productivity caused by extreme heat events. Using climate and economic modelling, the authors assessed both historical events and future scenarios under global warming.
Cyprus already leads EU in heat-related economic losses
They found that Cyprus currently experiences the highest relative economic losses in Europe from extreme heat and is projected to remain the most vulnerable country in the coming decades.
Across the European Union, heatwaves have already led to significant economic losses. During four particularly hot years analysed (2003, 2010, 2015 and 2018), the estimated GDP losses in Europe ranged from 0.3% to 0.5%, well above the historical average of 0.2% per year between 1981 and 2010. The study finds that extreme heat undermines labour productivity, primarily affecting outdoor work, and that these direct losses propagate across the broader economy.
Future projections are more concerning. The researchers estimate that, by the 2060s, average annual GDP losses in Europe due to heatwaves will reach 1.14%, a fivefold increase compared to the historical baseline. These effects are expected to intensify, particularly in southern and central Europe, but northern countries will also face losses. For example, Germany is projected to see a GDP reduction of 0.5% by 2050, while losses in Scandinavian countries will be limited to 0–0.2%.
Southern Europe most affected
The study does not provide sector-specific breakdowns for Cyprus, but consistently identifies southern European countries as the most affected due to higher heat exposure and greater economic reliance on outdoor labour, such as agriculture, construction, and tourism. While Cyprus is treated as a single region in the model, the authors describe it as a clear outlier in terms of economic vulnerability.
The modelling also suggests that the economic damage is not limited to heat-exposed sectors. Productivity shocks in outdoor activities such as farming or transport indirectly impact indoor sectors, including services and manufacturing, through the use of intermediate goods. While trade between European regions can help buffer these losses, the study finds that the negative effects of extreme heat are systemic and interconnected.
“Given the complementarity between primary and intermediate inputs, indirect effects spread substantially through the service sector,” the authors explain. “Trade mechanisms […] act as a buffer to mitigate this negative effect by substituting intermediate goods from less affected regions.”
The analysis used the Wet Bulb Globe Temperature (WBGT) as the primary heat stress metric, and found that under current conditions, indoor sectors are largely insulated. However, future projections suggest indoor workers, particularly in southern and central Europe, may become more affected as temperatures rise.
The authors caution that their estimates represent a lower bound of actual heat-related economic losses, as they do not account for costs from occupational injuries, urban heat island effects, or impacts on public health.
In terms of recommendations, the authors highlight gaps in climate policy and suggest improving regional data on heat-related health risks, stressing the importance of adaptation strategies, including occupational health measures and local climate-resilient economic planning.
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