Heatwaves are slowing growth, warns Bank of France governor

Saturday 20 June 2026 - 10:45

Heatwaves are increasingly becoming a drag on economic performance, according to the governor of the Bank of France, Emmanuel Moulin, who warned that rising temperatures linked to climate change are having a measurable impact on growth and financial stability.

Speaking on French radio, Moulin noted that repeated heatwaves have a “clearly negative” effect on economic growth over the medium term. He explained that while short-term effects are more complex—sometimes reducing productivity while also increasing energy consumption due to higher use of air conditioning—the long-term trend is more concerning for economic stability.

The central banker emphasized that extreme weather events such as heatwaves, wildfires, and floods are part of a broader set of climate-related risks that increasingly affect both the real economy and the financial sector. These events can disrupt production, damage infrastructure, and reduce overall productivity, all of which weigh on growth over time.

Moulin also highlighted the growing importance of climate risk for financial institutions. According to him, climate change has direct consequences for banks and insurance companies, as it affects the value of assets, the stability of financial portfolios, and the overall resilience of the financial system.

He stressed that Europe is particularly exposed to energy shocks and extreme weather events, making climate adaptation and decarbonization essential priorities. Investment in these areas, he said, is necessary to reduce long-term economic vulnerabilities and to strengthen resilience against future climate-related disruptions.

The governor added that addressing climate risks requires coordinated action from both the public and private sectors. While public investment plays an important role, he underlined that private financial actors must also contribute to funding the transition toward a lower-carbon and more resilient economy.

His comments come as France and several other European countries face increasingly frequent and intense heatwaves during the summer months, raising concerns among economists about the broader macroeconomic consequences of climate change.

As extreme weather becomes more common, policymakers are under growing pressure to integrate climate considerations into economic planning and financial regulation, ensuring that both growth and stability are protected in the long term.