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Climate-related natural disaster shocks are expected to rise as the earth is getting warmer, which will adversely affect growth globally. Empirically, the effects of typhoons and droughts have negative impacts on economic growth and would likely to persist up to 2 decades. Using the typhoon landfalls and damage in Asia, we analyze the wind–damage relationship and find damages to gross domestic product increase by 2.3% for an increase in maximum wind speed. The extreme projected temperature rise in Representative Concentration Pathway (RCP) 8.5 will result in higher typhoon damage by more than 50% in 2100. Vulnerable developing Asian economies could expect dampened growth with significant impacts on agriculture and tourism, a concern that may undermine years of development and worsen inequality. To cope with increasing disaster risks, both short-term adaptation strategies like relocation, government transfers, and other social safety nets, as well as long-term strategies are needed.

Impact of natural disaster shocks and macroeconomic growth in Asia