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Climate change losses could reach 40% of GDP by 2050: BI

Antara News - September 1, 2022

Muhammad Heriyanto, Raka Adji, Jakarta – Indonesia's climate change losses could reach 40 percent of the gross domestic product (GDP) by 2050, according to the assistant director of Bank Indonesia's macroprudential department, Heru Rahadyan.

The losses could affect various economic sectors, ranging from people of higher economic status to the lower-middle class, and from big companies to micro, small, and medium enterprises (MSMEs), he noted.

"If we lose 40 percent of our income, it will have a lot of effects. Some (sections of the population may) fall into poverty; companies could go bankrupt," he underlined during a discussion entitled "Sustainable Finance 101" organized by Bank Indonesia and WWF Indonesia, which was followed online from here on Wednesday.

Losses of 40 percent of the GDP by 2050 would be much larger than the global average of 18 percent, Rahadyan said. According to him, this could be attributed to Indonesia's geographical condition as an archipelagic and agricultural country.

"Ours is higher because Indonesia's geography is very vulnerable. We have many volcanoes in the Ring of Fire, and then there are many people living on the coast; there are millions," he added.

As an archipelagic country, climate change would greatly impact the distribution of logistics to all regions because weather conditions strongly impact the mobility of sea and air transportation, he explained.

Meanwhile, as Indonesia is an agricultural country, climate change will greatly affect the productivity of the agriculture and fisheries sectors because weather conditions have a significant role in the production process, he said.

Therefore, climate change will have a significant impact on logistics and supply chains in the country, which will consequently affect the economy, banking, and financial system.

According to Rahadyan, Indonesia's economic losses due to climate change have reached around Rp100 trillion per year, and the figure will continue to increase every year.

Source: https://en.antaranews.com/news/247337/climate-change-losses-could-reach-40-of-gdp-by-2050-b