Russia has begun counting the economic toll of the worst heatwave since records began as economists warned that the wildfires and disastrous summer harvest could wipe as much as 1 per cent off the country’s economic growth.
The record-breaking heatwave has destroyed grain crops across Russia, ruining close to a third of the country’s forecast harvest, while wildfires raging in the Moscow region have spread noxious smog over the capital, forcing businesses to close and many to flee the city.
Alexander Morozov, chief economist at HSBC, said the combined impact of the heatwave on agriculture and general economic activity could reduce Russia’s gross domestic product growth by about 1 per cent this year, a cost to the economy of about $15bn (€11bn, £9.5bn).
An estimated 10 to 13 per cent decline in Russian agricultural output this year would cost about 0.6 per cent of GDP, Mr Morozov said. Weather-related disruption to industrial production and the retail and services sector could account for a further 0.4 per cent decline.
Economists have predicted that Russia’s economy will grow by about 4 per cent this year as the country starts to recover from its steepest recession in more than a decade. But Mr Morozov said the impact of the drought and fires could halt the recovery in the third quarter.
That is a very serious consequence.