El Nino threatens food inflation across ASEAN nations

ASEAN nations are facing heightened food inflation risks due to the El Nino phenomenon, according to research from OCBC Group. The weather pattern is expected to drive up prices for essential commodities, including rice, wheat, corn, and vegetable oil.

Senior economist Lavanya Venkateswaran identified the Philippines, Indonesia, and Thailand as particularly vulnerable. Malaysia and Vietnam also face significant, though more concentrated, risks. Because many major economies in the region are net importers of food, there is an increased risk of imported inflation, particularly if global prices for grains rise.

The impact on economic growth is expected to be uneven, primarily affecting the agricultural sector. Countries with large agricultural bases, such as Indonesia, the Philippines, Thailand, and Vietnam, face risks of declining production and reduced rural incomes. However, agricultural exporters like Indonesia, Malaysia, Thailand, and Vietnam may partially offset these impacts through increased commodity export revenues.