Delivering a ‘Double Dividend’ For MENAAP Firms in Extreme Heat – New World Bank Report

WASHINGTON, June 22, 2026 - Across the Middle East, North Africa, Afghanistan, and Pakistan (MENAAP), three out of ten firms operate in extreme heat conditions for more than 100 days a year. Prolonged high temperatures are reducing sales, undermining productivity, and lowering wages across the region.

The flagship report, Competing in the Face of Climate Risks: Evidence from Firms and Policy Priorities in MENAAP, presents cross-country, firm-level evidence on the tangible impact rising temperatures and climate-related trade policies have on financial markets. The report finds that roughly 17 additional days per year are associated with a six percent drop in sales, a four percent decline in labor productivity, and an eight percent reduction in wages.

"The economic impacts of climate shocks are no longer a future projection; they are a present reality for businesses across MENAAP," said Ousmane Dione, World Bank Regional Vice President for the Middle East, North Africa, Afghanistan, and Pakistan. "However, by implementing the right reforms, countries can turn these challenges into a 'double dividend'-boosting productivity while building resilience against climate shocks."

According to the report, MENAAP faces a changing external environment with new climate-related trade policies set to impact carbon-intensive exports. While the aggregate macroeconomic impact on the region's GDP is projected to be a modest 0.1 percent decline (approximately US$1.4 billion), specific sectors are significantly exposed to the European Union's and the forthcoming United Kingdom's Carbon Border Adjustment Mechanisms. The sectors most exposed include Libya's iron and steel, Tunisia's cement, Oman's fertilizers, and Egypt's aluminum.

"Competitiveness in the global market will increasingly depend on 'green competitiveness'," said Sandeep Mahajan, World Bank Regional Practice Director, Prosperity. "This is about more than just emissions; it is about practical constraints like access to green finance, reliable quality infrastructure, and the ability to certify carbon content. Strengthening these systems will allow regional firms to maintain and even expand their access to high-value international markets."

The report outlines how climate-responsive reforms can deliver a double dividend: helping firms and economies adapt to heat and other climate stresses while also addressing long-standing barriers to productivity, investment, and competitiveness. Reforms include improving access to finance, easing business environment bottlenecks, and supporting firms' green competitiveness. The report also highlights cooling solutions as a promising growth sector, with an estimated market value of US$46 billion by 2050. Climate-responsive reforms mean creating more jobs, building new skills, and sustaining livelihoods through cool roofs, insulation, and nature-based urban design.

Improving access to finance for adaptation and green investment, easing business environment bottlenecks that magnify heat-related losses, strengthening carbon certification and related quality infrastructure, and supporting firms' green competitiveness are policies that, according to the report, help strengthen firms' resilience to rising temperatures and retain access to high-value export markets.

About the World Bank Group: The World Bank Group works to create a world free of poverty on a livable planet through a combination of financing, knowledge, and expertise. It consists of the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). For more information, please visit www.worldbank.org, ida.worldbank.org/end/home, www.miga.org, www.ifc.org, and www.icsid.worldbank.org.