Malta’s economy is among the most vulnerable in the European Union to extreme weather events, a new study warns.

Researchers from the European Central Bank and the University of Mannheim estimate that heatwaves, droughts and floods across Europe this summer will reduce economic activity by €43 billion in 2025, equivalent to 0.26 per cent of EU output.

By 2029, the long-term effects of these events are projected to reduce regional economies by €126 billion compared to a scenario without extreme weather.

The study highlights the disproportionate impact on smaller economies such as Malta, Cyprus and Bulgaria. Malta’s Gross Value Added (GVA) – a measure of economic output – is expected to fall by €236.5 million in 2025, equivalent to 1.14 per cent of its 2024 output.

By 2029, the loss could deepen to €609 million, or 2.93 per cent. On a per-person basis, this translates to around €401 in 2025, rising to €1,031 by 2029.

A recent report by the Energy and Water Agency said Malta experienced weather conditions similar to those in desert climates between September 2023 and August 2024.

Effects of extreme weather often persist for years

The report called for greater diversification of water supply and the sustainable use of non-conventional water resources.

Across Europe, southern countries such as Spain, Italy, Portugal and Greece face the largest absolute losses, particularly from droughts and heatwaves. Northern and central countries such as Germany, Denmark and Austria are more prone to flooding, though the economic damage is smaller by comparison.

At EU level, the report notes that the estimates are likely conservative, firstly because they exclude the combined effect of droughts and heatwaves in the same region and because they do not account for wildfires.

The authors warn that the economic effects of extreme weather often persist for years. “The negative impact of extreme weather events on European regions worsens, with the greatest impact often several years after the event, even for regions where no further extreme event occurs,” the report notes.

The study concludes that “extreme weather events are increasingly having substantial economic impacts in Europe. With continued climate change, these impacts are likely to grow in the coming decades.”