The G7 economies could make an average loss of 8.5 percent annually by 2050, equivalent to US$4.8 trillion, without more commitment to ambitious climate action, Oxfam analysis of research by Swiss Re Institute indicates.

With that much erosion of GDP, Oxfam is urging G7 economies to cut carbon emissions more quickly. So as to avoid the devastating effects of climate change, as they are more systemic in nature.

Based on its analysis, Oxfam found that the loss in GDP is double that of the coronavirus pandemic. And therefore, caused these powerful world economies to shrink by an average of 4.2 percent. Thus, resulting in huge job losses and some of the largest economic stimulus packages ever seen.

While the effects of the pandemics continue to wane, climate change effects will be seen every year, Oxfam asserts.

The Swiss Re assessed how likely climate change affects economies. It highlighted effects on chronic climate risks, impacts on health, sea-level rise and agricultural productivity.

Of all 48 countries in the study, all economies considered were predicted to be hit with an economic contraction by 2050. But for the G7 countries, predicted contraction was far less than the rest of the economies. For instance, South Africa is projected to lose 17.8 percent, Egypt- 9.7 percent, and India- 27 percent from their economies.

Particularly, the statistics reveal that low-income countries will be affected most severely. This is due to the fact that extreme poverty levels may elevate to unsustainable levels.

G7 climate action still inadequate

Max Lawson, Head of Inequality Policy at Oxfam, commented that: “The economic case for climate action is clear ―now we need G7 governments to take dramatic action in the next nine years to cut emissions and increase climate finance.

“The economic turmoil projected in wealthy G7 countries is only the tip of the iceberg: many poorer parts of the world will see increasing deaths, hunger and poverty as a result of extreme weather. This year could be a turning point if governments grasp the challenge to create a safer more liveable planet for all.”
Max Lawson, Head of Inequality Policy at Oxfam

Meanwhile, all G7 economies have set new climate targets for the UN COP26 climate summit. And that most have set targets below the required target to limit global warming below 1.5 °C. As part of the world’s largest emitters of carbon dioxide, they should act first by showing high commitment to reducing emissions drastically, Oxfam urges.

Oxfam is therefore calling on G7 governments to immediately raise their targets for cutting emissions over the next nine years. By this, they will reach their fair share of the reductions needed to keep global warming below 1.5°C. Oxfam notes that although the recently announced commitments are welcome, yet they do not go far enough.

G7 economies should dramatically increase their pledges of climate finance over the next four years. They should ensure that at least half of this funding is for adaptation of climate change.