Martin Kotlář, Martin Motl, Zlatuše Komárková
The Czech Republic has committed to transitioning to climate neutrality by 2050. This commitment implies a need for structural changes in the Czech economy. This article presents long-term climate scenarios mapping the transition to climate neutrality and simulations of the impacts of selected scenarios on the Czech macroeconomic environment and goes on to identify potential sources of climate risks to financial stability. The analysis indicates that the climate scenarios have a stagflationary impact, causing lower economic activity and higher inflation, although substantially less so in the Czech economy than in the global economy. The model simulations also show that the choice and timing of global climate policy will be crucial in determining the future impacts of climate change and the related costs. However, climate policy may adversely affect certain industries and sectors of the economy. We use a set of indicators to identify the potential vulnerability of real economic sectors and banks in the Czech Republic to climate risks. The CNB regularly monitors these indicators when assessing the level of climate risks and their impacts on financial stability.
Issued: December 2023
Download: Thematic article on financial stability 1/2023 (pdf, 758 kB)