What question did this study set out to answer?

This research aims to evaluate the accuracy of climate change economic impact forecasts.

May 6, 2026IMF Working Paper0 citationsOpen Access

When Forecasts Meet Reality

JEJohannes Emmerling PWPaul WaidelichETH Zurich MBMatthieu BellonInternational Monetary Fund

Key Points

This research aims to evaluate the accuracy of climate change economic impact forecasts.
Analyzed IMF World Economic Outlook forecasts from 1990 to 2023
Conducted placebo tests to confirm missing climate effects in forecasts
Compared climate damage estimates with actual GDP growth
Climate damage functions reduce mean absolute errors by up to 0.4 percentage points
Forecast errors account for only a small share of climate damage effects
Some predictions of severe climate impacts are inconsistent with GDP growth observations

Abstract

This paper assesses estimates of the economic impacts of climate change by leveraging the IMF’s World Economic Outlook (WEO) forecasts (1990-2023) as climate-free counterfactuals. Placebo tests confirm WEO forecasts do not capture climate effects. By adding climate damage estimates to forecasts and comparing with actual GDP growth, we find climate damage functions explain only a small share of forecast errors—reducing mean absolute errors by up to 0.4 percentage points (about 6% of the forecast error). The most severe damage functions predict contractions in some countries that are inconsistent with observed growth, suggesting overstated near-term climate impacts.

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