This year’s El Niño weather system, expected to be one of the strongest in decades, could cause a global economic shock that the world is unable to absorb given existing stress on supply chains, Deutsche Bank warned.
The phenomenon causes temperature spikes every few years and shifts weather patterns, exacerbating global warming trends: The US can expect wetter conditions, and India weaker monsoons.
Disruption to agriculture, hydropower, shipping, and even political stability makes it “a multi-channel supply shock,” DB economists said.
Alongside the Iran war, El Niño will “push inflation higher … when it is already above target.” It also raises the risk of natural disasters: China is offering typhoon survival training in coastal cities ahead of El Niño’s arrival.