Heatwave: Analysis of its Effects on the Economy

Heatwaves are no longer temporary summer anomalies. They have now become a structural economic risk factor, documented across all geographical scales. A study published in July 2023 already estimated the cost of heatwaves at 0.6 percentage points of global GDP. Since then, data have multiplied and projections have become more severe. Our market research company now reviews the latest findings using the most recent data.

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A climate phenomenon whose intensity is accelerating

The decade that has just ended includes the eleven hottest years ever recorded. In recent years, the global temperature anomaly has approached the +1.5°C threshold relative to pre-industrial levels (1850–1900), according to the World Meteorological Organization, which is very close to the maximum limit established by the Paris Agreement.

The frequency of extreme events follows the same trajectory. In the United States, the number of heatwaves per year increased from around 2 in the 1960s to more than 6 in the 2020s. Globally, heatwaves are now three times more frequent than they were 60 years ago, and more than 1.2 billion workers are exposed to serious health risks from them (2025 data).

7 statistics on the impact of heatwaves on economic growth

• -0.6 percentage points of GDP: cost of heatwaves in the United States, Europe, and Asia (2023 and 2025).
• -40%: reduction in the capacity to perform physical work at 32°C.
• -0.9 percentage points of GDP: estimated loss for Greece after 35 days above 32°C.
• -2.2%: projected reduction in global working hours due to heat stress by 2030 (ILO), equivalent to 80 million full-time jobs.
• 470 billion hours: potential working hours eliminated by heat worldwide in 2021.
• -12%: decline in long-term global wealth for a 1°C increase in temperature (Bilal and Känzig, 2024).
• $100 billion: annual losses caused by extreme heat in the United States (2024 data).

Heatwaves and declining productivity

The loss of workplace productivity is the most thoroughly documented mechanism. The thresholds are clear: according to the ILO, above 33°C, a worker’s performance drops by 50%. In the construction sector, productivity declines by 30–40% as soon as temperatures reach 30°C and approaches a 100% loss at 40°C. An environmental ergonomics study conducted by a British university found that productivity falls by an average of 35% at 35°C and reaches a decline of 76% at 40°C.

These effects persist over time. An analysis published in 2024 (Costa et al.) shows that one additional heatwave lasting at least five days leads to a 0.2% reduction in annual labour productivity, with effects that may persist for up to two years. Furthermore, companies increase adaptation investments (particularly air conditioning) at the expense of more productive investments, amplifying the macroeconomic impact.

Country analysis: highly differentiated impacts

Geographical exposure and the level of preparedness largely determine the magnitude of losses. The table below summarises the available data for the main European countries.

We have also visualised the data as a chart (below), which you may reuse if needed (see reuse conditions at the bottom of each graphic).

A structural observation emerges at the European level: approximately 19% of European households are air-conditioned (May 2026), compared with 90% in the United States. European buildings are often designed to retain heat rather than dissipate it, which mechanically increases exposure for both workers and households.

The French case: high economic weather sensitivity

In France, 70% of the economy is considered weather-sensitive (2012 data). The 2003 heatwave remains the benchmark: its negative impact was estimated at €15–30 billion, with agricultural losses of:

• 22% for cereals
• 30% for grain maize
• 9% for viticulture

The summer of 2025 showed a different profile: French growth remained solid in Q2 (+0.3%), and the national statistical institute concluded that there was no significant short-term effect from the two heatwaves (19 June–4 July, then 8–18 August).

This short-term result should not obscure medium-term effects. Electricity consumption rose by +7.1% during the first heatwave, and national production fell by 1.4%. On the regulatory side, a decree entering into force on 1 July 2025 imposed stricter obligations (water provision, adjusted working hours), with fines of up to €10,000 per employee.

Germany: from denial to quantification

The evolution of the German discourse illustrates the broader shift in economic understanding. In 2006 and 2015, macroeconomic effects of heat were considered negligible by local economic institutes. Recent analyses estimate potential losses of more than €100 billion for the German economy by 2030, describing extreme heat as a “structural economic shock”. Productivity would fall by around 3% per additional degree above 30°C, and GDP losses could reach 3% over four years.

The most exposed sectors

• Agriculture: losses are often irreversible due to natural cycles. In France, AOP mountain cheeses represent 250,000 tonnes per year and €2.4 billion in revenue, a sector directly threatened by livestock heat stress. Milk production can fall by up to 10% during intense heat periods.
• Energy: demand rises (cooling) while production declines. Nuclear plant efficiency drops by 0.12 to 0.17 points per degree of warming in the cooling source. In France, 93 GWh had already been lost at the beginning of summer 2025.
• Construction and logistics: in Italy, a national agreement signed in July 2025 made a 12:30–16:00 work break mandatory in these sectors, with a short-time work scheme estimated at €30 million for summer 2025.
• Insurance: drought accounts for 52% of climate-related claims over the past decade in France. Insured damages exceeded €1 billion in 2025, compared with €3.5 billion in 2022.

Markets that benefit from heat?

Heatwaves redistribute consumption as much as they destroy it. We observe this particularly when we study the FMCG market. Unsurprisingly, in France ice cream sales recorded strong growth during the summer of 2025 compared with the previous year, generating several hundred million euros in additional revenue.

Another example is demand for cooling equipment. Demand surges during heatwaves: during recent heat peaks, sales of air conditioners and fans increased fivefold, even tenfold in some retail chains within a few weeks.

Above 25°C, each additional degree leads to a 5–7% increase in beer sales volume and mechanically in related sub-segments such as No/Low beverages. Water sales can double over two days of heatwaves and rise by 30–40% over several days. However, these gains are partial: in 2015 in France, frozen ready meals fell by 22% and chocolate confectionery by 16%.

Towards zones of economic exclusion

Beyond cyclical effects, the multiplication of heatwaves raises the question of the future of certain territories. In Europe, it is estimated that 0.61 additional heatwave days will be added each year. Some areas of Greece, Italy and Spain could lose economic attractiveness due to two combined factors:

• Competitiveness: sustained productivity losses would force companies to relocate to more climatically favourable regions.
• Legal and insurance risk: insurers are already withdrawing from areas exposed to fires and droughts. Without risk coverage, companies cannot maintain operations.

The academic study published in September 2025 by Usman et al. estimated macroeconomic costs for the European Union of up to €126 billion by 2029. In the long term, entire geographical areas risk becoming economic deserts, and not all states will have the financial capacity to mitigate this.

FAQ: The questions you are asking

What is the global economic cost of a heatwave?

A study published in July 2023 estimated the impact of heatwaves at 0.6 percentage points of global GDP, an estimate confirmed for the summer of 2025. By 2030, the ILO estimates that a 2.2% reduction in working hours worldwide would cost 2.4 trillion dollars, equivalent to 80 million full-time jobs. To analyze your sector’s exposure to these risks, IntoTheMinds offers tailored B2B market research studies.

How does heatwave affect worker productivity?

Productivity decline begins at 24–25°C according to the ILO. At 32°C, the capacity to perform physical work drops by 40%. Beyond 33°C, performance falls by 50%, and at 40°C the decline reaches 76% according to a UK university specializing in environmental ergonomics. An additional heatwave lasting at least five days leads to a 0.2% annual productivity loss, with effects lasting up to two years (Costa et al. 2024).

Which economic sectors are most affected by extreme heat?

Agriculture, construction, logistics, and energy are the most exposed sectors. In France, agriculture and energy show directly measurable losses from the first days of a heatwave. In Italy, 3 million workers in construction and logistics were forced to stop working during the summer of 2025. The B2C market research studies conducted by IntoTheMinds help assess consumer behavior during heat events.

Which European countries are most economically vulnerable to heatwaves?

Spain, Italy, and Greece are among the most exposed countries. For summer 2025, expected GDP losses reached up to 1.4 percentage points in Spain and 1.2% in Italy. Germany, long considered less vulnerable, revised its assessment: a May 2026 study estimates possible economic losses of 112.5 billion euros by 2030. At EU level, macroeconomic costs could reach 126 billion euros by 2029 (Usman et al. 2025).

How can companies measure their exposure to heatwave risk?

Exposure assessment requires a precise sectoral and geographic analysis: identification of weather-sensitive activities, mapping of exposed suppliers, and estimation of productivity losses based on temperature thresholds. IntoTheMinds supports companies in this process through B2B market research studies and customer satisfaction surveys that help evaluate the impact of climate conditions on purchasing behavior.

Can heat also have positive effects on certain markets?

Yes, some sectors directly benefit from heatwave episodes. In France, ice cream sales reached 263.7 million units between January and mid-July 2025, compared with 209.1 million over the same period in 2024. Air conditioner sales increased by +516% and fan sales by +939% in May 2026. Beverages, sun care products, and outdoor equipment also record significant growth, but these gains do not offset overall economic losses.