Potential Super El Nino Could Weigh On Malaysia, Indonesia, Thailand Growth Into 3Q 2027 -- CIMB

KUALA LUMPUR, Aug 27 (Bernama) -- A potentially record-strength El Nino could weigh on economic growth in Malaysia, Indonesia and Thailand from late 2026 into the third quarter (3Q) of 2027, with Indonesia and Thailand likely to be hit earlier than Malaysia, according to CIMB Investment Bank Bhd. 

In its CIMB Treasury and Markets Research report today, it said the Relative Oceanic Nino Index (RONI) is expected to peak at between 2.5°C (Celcius) and 3.0°C in November and December 2026, with rainfall stress likely to emerge in Indonesia in 3Q 2026, followed by Malaysia and Thailand in 1Q 2027.

“Gross domestic product (GDP) drag from adverse El Nino could run from late 2026 into 3Q 2027,” it said.

Assuming a peak RONI of 2.5°C, CIMB said the impact on quarterly GDP growth is expected to peak at around 0.4 percentage point in Thailand and 0.3 percentage point in Indonesia in 1Q 2027.

Malaysia is expected to experience the impact later, with quarterly GDP growth potentially taking a hit of around 0.2 percentage point at its peak in 3Q 2027, it said.

Despite the potential impact on growth, CIMB said broader demand effects from El Nino appear to have been limited historically.

However, the investment bank said growth risks are skewed to the downside due to fertiliser costs, water shortages and haze associated with adverse El Nino conditions.

-- BERNAMA