AREO in Five Charts: How El Niño Could Affect ASEAN+3

KUALA LUMPUR, 5 OCTOBER 2026 —

AMRO said that El Niño is likely to become very strong toward the end of 2026, with effects extending into 2027, and that under a scenario combining a more persistent El Niño with export restrictions similar in scale to India’s 2023 rice measures, ASEAN+3 growth would be 0.1 percentage point lower in 2027 while headline inflation would be 0.2 percentage point higher.

According to AMRO, the magnitude of the impact will depend on each economy’s exposure to agriculture, its capacity to adjust, and whether trade responses amplify food‑price pressures, meaning the modest aggregate effect could hide larger losses in vulnerable areas and households.

The report stresses that food‑price pressures could spread more widely if trade restrictions tighten international supply, and that the priority is to prepare early, target support where losses materialise, keep regional supply channels open and maintain surveillance well into 2027 as harvest, income and price effects unfold.

AMRO noted that ASEAN+3 is projected to grow by 4.1 percent in both 2026 and 2027, while inflation is projected at 1.6 percent in 2026 and 1.7 percent in 2027. The 2027 inflation forecast has been revised up partly because of El Niño‑related food‑price pressures, alongside higher energy prices. Current forecasts indicate a very strong El Niño event around the end of 2026, with conditions easing in early 2027 (Figure 1).

Near‑term rainfall risks are concentrated over maritime Southeast Asia, while above‑normal temperatures are expected more widely, although the event’s strength and timing do not translate directly into local weather conditions or economic losses.

The office said the effects could extend beyond agriculture: lower rainfall and higher temperatures could weaken crop yields and rural incomes, while reduced water availability could constrain irrigation and hydropower as electricity demand rises. Prolonged dryness could also increase fire and haze risks, with spillovers to health, labor productivity, aviation and tourism (Figure 2). Some effects may appear quickly, but harvest and food‑price pressures may become more visible only in 2027.

The scale of the impact will vary with exposure and the capacity to adjust; economies where agriculture accounts for larger shares of output and employment face greater production and rural‑income risks, and food‑price exposure extends more widely to economies with high food weights in consumer baskets or greater import dependence (Figure 3).

Rice stocks provide one measurable buffer, but outcomes also depend on usable water, irrigation capacity, alternative suppliers, electricity‑system flexibility and the capacity to adapt production and distribution; the figure is therefore a structural screen, not a ranking of likely losses.