El Niño and the economy

Source: Bloomberg Business

We had the strongest El Niño in 2015 and is likely to grow stronger estimated by the scientists, leading to more weather extremes and hazards and associated casualties and property damages. What's more is that increased occurrence of extreme weather condition brings significant economic and political impacts, which resonates all over the world. Here are some examples:

• Reduced monsoon rains in southeastern Asia parts of Africa brings negative impacts on crop yields. For instance, Thailand is expecting a 20% reduction in rice yield as a result of drier monsoon weather. Fall in supply leads to rise in food and commodity prices, making it more difficult for these developing countries to curb inflation. 

• Increased food insecurity and persistent low oil prices are likely to worsen economic pressure and political stability in the Middle East, which may lead to more political unrests and social instability. In regards to Syria condition, this encourages more immigration to Europe, setting greater social and political pressure on national security and resource allocation in European countries.