How El Niño Could Impact US, Global Economy
Summary
A report by the U.N. agency IFAD estimates that the current El Niño could cause about $11 trillion in global income losses over roughly five years. It says drought, flooding, damage to transport and trade disruptions could hurt farms and raise food prices; a San Francisco Federal Reserve analysis also linked the pattern to a small recent increase in U.S. prices.Key Facts
- IFAD’s estimate covers direct effects on agricultural economies and wider disruption to infrastructure, commodity markets, consumer demand and trade.
- IFAD based the estimate on earlier strong El Niño events; its range was about $7 trillion to $14 trillion in losses.
- The agency said drought can reduce crop yields, increase irrigation needs and lower hydropower supplies.
- IFAD cited India, where hydropower output fell 21 percent as the June monsoon was 40 percent below normal.
- Floods and storms can damage roads and bridges, while low water levels can disrupt shipping, including through the Panama Canal.
- IFAD said a modelled small corn farm lost about 60 percent of its usual annual net income when severe drought coincided with higher fertilizer and energy costs.
- The San Francisco Federal Reserve said El Niño may have raised U.S. prices by about 0.3 percentage point between April and July; it expected that increase to fade by year-end.
- The article says U.S. El Niño patterns often bring wetter conditions to the South and warmer, drier conditions to the North during winter.
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