S&P: Emerging Economies Credit Ratings Will Suffer from Climate Change

May 16, 2014

Climate Deniers like to be seen beating their breasts and rending their garments about how dealing with climate change will hurt third world countries.
As always, it is the opposite that is true.

NBC News:

Climate change will be a significant factor in sovereign credit ratings and is already putting them under downward pressure, Standard & Poor’s Ratings Services warned on Thursday.

It argued that climate change – and particularly global warming – will hit countries’ economic growth rates, their external performance and public finances.

“Climate change is likely to be one of the global mega-trends impacting sovereign credit worthiness, in most cases negatively,” it said in a report.

Recent bouts of extreme weather – from Typhoon Haiyan in the Phillipines to the bitterly cold winter in the United States and heavy flooding across Britain — have drawn attention to the financial and economic effects of climate change.

They have also highlighted the growing cost of natural disasters. According to reinsurer Munich Re, overall losses in East Asia, for instance, used to be below $10 billion per year, but over the past decade have regularly topped $20 billion – and peaked at over $50 billion.

But despite this surge in extreme weather, S&P has not, to date, revised the rating of a country as a result.

“However, assuming that extreme weather events are on the rise in terms of frequency and destruction, how this trend could feed through to our ratings on sovereign states bears consideration,” it said in the report.

According to S&P, poorer and lower-rated countries will be the hardest hit by climate change. All of the 20 nations ranked most-vulnerable by S&P are emerging markets, with the vast majority in Africa or Asia.

“This is in part due to their reliance on agricultural production and employment, which can be vulnerable to shifting climate patterns and extreme weather events, but also due to their weaker capacity to absorb the financial cost,” S&P said. It added that this could contribute to rising global rating inequality.

Vietnam, Bangladesh and Senegal topped the list of countries most vulnerable to climate change, whereas developed nations – the United States and Europe – were at the bottom of the ranking.


5 Responses to “S&P: Emerging Economies Credit Ratings Will Suffer from Climate Change”

  1. astrostevo Says:

    The nations who have done least to create the problem will be hit the hardest by it.

    Its already happening. Anyone else recall the typhoon that hit the Phillipines last year to name just one of countless examples.

  2. philip64 Says:

    Crocodile tears indeed. Contrarians often claim to be terribly concerned about the poorest countries of the world, while at the same time arguing for reductions in relief and development aid. As usual this is about reaching for whatever argument might gain a little traction among the uninformed. It doesn’t matter if it’s all hypocritical cant.

  3. dumboldguy Says:

    How selfish of these developing countries to concentrate on “agricultural production and employment” and thereby make themselves “vulnerable”. The obvious solution is to concentrate not on growing food to feed their (often undernourished) masses, but on manufacturing junk for the consumers in the developed world. They can always buy food from other countries (until AGW causes other countries to have no food to sell to them).

    And just when they may need help, the bankers will kick them while they’re down by making it more costly for them to borrow money. It’s a great world, isn’t it?

  4. […] 2014/05/16: PSinclair: S&P: Emerging Economies Credit Ratings Will Suffer from Climate Change […]

  5. […] 2014/05/16: PSinclair: S&P: Emerging Economies Credit Ratings Will Suffer from Climate Change […]

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