Europe's record-breaking heatwave looks set to continue with wildfires that have devastated parts of Spain and France now spreading to Italy and Greece while the drying out of the Danube has forced Hungary to power down its sole nuclear power plant.
Markets should pay attention.
The economic costs are mounting, from healthcare spending and insurance claims to reconstruction bills and higher food prices, at a time when many heavily indebted governments are already grappling with the fallout of the Iran war. Adding to concerns, a 'super' El Niño event appears increasingly likely, raising the risk of further extreme weather globally.
In Britain, also facing wildfires and drought, major supermarket groups warn another food-price shock could be looming. In Germany, meanwhile, a contentious cabinet reshuffle has renewed pressure on Chancellor Friedrich Merz as the country also battles record temperatures.
The Reserve Bank of India announces its latest policy decision on Wednesday, with most economists polled by Reuters expecting no change to the benchmark interest rate of 5.25%.
However, authorities will be attempting to prop up the rupee INR=, one of Asia's worst-performing currencies this year.
In June, the central bank unveiled measures designed to boost capital inflows and strengthen the balance of payments. The moves attracted more than $20 billion in their first month, but renewed strength in oil prices has since clouded the outlook.
For those thinking an interest rate increase might help, retail inflation has just breached the central bank's target for the first time in over a year. Nevertheless, economists still expect the risks to growth to keep policymakers from acting, for now at least.
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