UBS warns El Niño could hit Latin American economies, Colombia most vulnerable

Swiss bank UBS issued a warning that a strong El Niño episode could raise inflation, keep interest rates high and strain economies across Latin America. The analysis ranks Colombia as the most exposed due to high food and electricity‑price shocks, persistent inflation and a weak fiscal position. Brazil and Peru are also flagged for macro‑economic fragility and direct climate exposure, while Venezuela may see hydroelectric stress and Panama could face lower canal water levels. Argentina could benefit from increased rainfall, and Mexico’s exposure is mixed. UBS expects any El Niño‑driven inflation shock to reinforce expectations for higher policy rates as central banks aim to protect credibility and currency stability.