Climate change induced shocks could result in at least 6% annual economic losses in one third of Asia -Pacific countries according to a new report by the UN Economic and Social Commission for Asia and the Pacific (ESCAP).
The new 164-page report Economic and Social Survey of Asia and the Pacific 2025: Understanding the Macroeconomic Implications of Climate Change published in April 2025 says, “Despite driving 60% of the world’s economic expansion in 2024, several countries in the Asia-Pacific region are still not ready to cope with climate shocks and the implications of transitioning to a greener system.”
The report highlights the complex macroeconomic-climate interplay. It outlines the challenges assessing the economic resilience of the region – including slower productivity growth, high public debt risks and rising trade tensions.
UN under-secretary-general and executive secretary of ESCAP Armida Salsiah Alisjahbana said, “Increasing global economic uncertainty and deepening climate risks are also not making it easy for the fiscal and monetary policymakers. Navigating this evolving landscape requires not only sound national policies but also coordinated regional efforts to safeguard long-term economic prospects and tackle climate change.”
Among the 30 countries from the APAC region analysed in the report, 11 were identified as more exposed to climate risks from the macroeconomic perspective. These include Afghanistan, Cambodia, the Islamic Republic of Iran, Kazakhstan, the Lao People’s Democratic Republic, Mongolia, Myanmar, Nepal, Tajikistan, Uzbekistan and Vietnam.
The report reveals there are also significant disparities in coping ability across the region. The report says while some countries have mobilised sizeable climate finance and adopted green policies, others still face a range of challenges.
“Extreme weather events pose a greater threat than slow-onset events due to sudden destruction and loss of wealth. This leads to collateral loss, credit defaults, business disruptions and increased asset valuation volatility. Post-disaster capital replacement, insurance claims and real estate price changes further exacerbate risks, decreasing financial stability and complicating climate investment financing,” the report said.
“The rising frequencies of destructive events are driving costs higher, potentially rendering insurance unaffordable or risks uninsurable. Furthermore, while insurance distributes losses, it does not eliminate them. Even government fiscal measures to cover uninsurable losses to increase financial system stability merely redistribute costs and do not eliminate them. They also reduce funding for other fiscal priorities. Therefore, frequent, severe losses could make certain areas economically unviable for insurance.”