Singapore: El Nino is likely to pose a bigger inflation risk than a growth shock for ASEAN economies, with higher prices for rice, wheat, maize, and vegetable oils expected to be the main channels of impact, OCBC Group Research said on Wednesday, reported Xinhua.

According to Nam News Network, Lavanya Venkateswaran, senior ASEAN and India economist, identified the Philippines, Indonesia, and Thailand as the ASEAN economies most exposed to El Ni±o, while Malaysia and Vietnam face meaningful but more concentrated risks. She emphasized that higher food prices "can add to regional inflationary pressures, with imported inflation risks also rising considering most of this region are net food importers".

Venkateswaran explained that apart from Thailand and Vietnam, major economies in the region are generally net rice importers, which leaves the Philippines, Malaysia, and Indonesia vulnerable to potential terms-of-trade shocks from higher rice prices. Additionally, most economies in the region, including ASEAN-6, are large net grain importers and are particularly susceptible to imported inflation pressures when global wheat and maize prices rise.

The economist noted that the extent of food inflation transmission would vary depending on the weight of food in consumer price baskets, import dependence, and government intervention through measures such as subsidies and price controls.

The anticipated growth impact is expected to be more uneven and primarily concentrated in agriculture. Countries like Indonesia, the Philippines, Thailand, and Vietnam, which have relatively large agricultural sectors, are more vulnerable to production losses and weaker rural incomes.

However, Venkateswaran suggested that agricultural exporters such as Indonesia, Malaysia, Thailand, and Vietnam could benefit from higher commodity export revenues. "The ultimate macroeconomic impact will depend not only on weather outcomes but also on policy responses, including food trade restrictions, stock releases, and subsidy measures," she concluded.