Global | El Niño in Latin America: Same Ocean, Three Different Guys

Summary

El Niño is a recurring Pacific Ocean warming event that affects Latin American countries in very different ways. Its economic impact depends on each country's exposure and vulnerability, influencing growth, inflation, agriculture and infrastructure through diverse climate transmission channels.

Key points

• Key points:
• El Niño is not a uniform shock. The same Pacific warming generates very different climate outcomes across Latin America, including droughts, floods and temperature anomalies.
• Argentina may benefit through agriculture, but faces flood risks. El Niño is often linked to above-average rainfall, supporting crop yields and primary exports, although excess water also raises risks for infrastructure, trade and agriculture.
• Colombia is mainly exposed through drought, inflation and hydropower. Lower rainfall and higher temperatures affect agriculture and reservoir inflows, while strong El Niño events can generate significant food price pressures with several months of lag.
• Peru shows the clearest macroeconomic vulnerability. Coastal warming can disrupt fisheries, agriculture, infrastructure and prices, turning El Niño into a recurrent source of volatility for growth, inflation and monetary policy.

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