Southeast Asia is bracing for extreme El Nino weather patterns as households and governments in the region struggle to respond to high energy, transportation and food bills linked to the Iran war.
United Nations weather agency, World Meteorological Organization (WMO), Hope El Nino conditions are likely to emerge before August and continue at least till November. This means that surface waters across large parts of the Pacific Ocean will be warmer than normal, and disruptions to normal east-to-west wind patterns are likely to bring more warming to the central and eastern Pacific.
Southeast Asia is entering the months when monsoon rains typically fill reservoirs, cooling extremely hot cities and flooding fields ahead of the next planting season. However, if rains arrive late or are weaker than normal, farmers may delay planting, reduce acreage or move away from over-watered crops.
“Southeast Asia’s agricultural sector is exceptionally sensitive to new El Niño shocks because its two primary commodities, rice and palm oil, are highly concentrated and uniquely sensitive to climate anomalies,” Jason Lee, chair of the Southeast Asia Hub of the Global Heat Health Information Network, told DW.
“This extreme risk means that what starts as a local, farm-level shock could rapidly turn into a broader, systemic food-price and inflation crisis across the region.”
Rice, palm oil and inflation risks
Rice crops are the biggest political risk for Southeast Asian countries. It is a staple food of the region, closely linked to rural livelihoods and could trigger public anger if its prices rise.
Paul Teng, a visiting senior fellow in the ISEAS-Yosof Ishak Institute’s Climate Change Program in Southeast Asia program, told DW that rice is likely to be most affected due to reduced rainfall and increasing heat stress.
“In rainfed rice areas, there is likely to be a greater incidence of local drought and in irrigated rice areas there is likely to be water stress due to low reservoir and irrigation levels,” Teng said. The most vulnerable countries are Thailand, Philippines, Indonesia and Cambodia.
He said the region could see a 2%-8% decline in rice production compared to a normal year, with local losses in drought-stricken areas also higher.
Palm oil is the other major concern, particularly in Indonesia and Malaysia, which account for about 85% of the world supply.
“Palm oil is sensitive to the expected temperature increase, but unlike rice, the impact may be felt 6-12 months later due to a reduction in fresh fruit bunch formation and oil extraction rates,” Teng said.
Analysts have warned that fertilizer and gas prices have risen sharply due to the ongoing war in Iran and that an extreme El Nino will cause prices to rise even higher. This has caused already high food prices across the region.
Lee said markets often react not only to shortages, but also to fear of shortages, driving up prices before crop losses are fully known.
“This leaves central banks on high alert, forcing them to keep interest rates high to tackle sticky, food-driven inflation, at the same time as regional businesses face higher borrowing costs and government budgets are already strained by essential subsidies and rising energy bills,” he said.
an economic storm is brewing
Many Southeast Asian governments have already turned to coal to offset energy shortages and introduced subsidies for food and basic services.
And the Asian Development Bank has cut its 2026 growth forecast for growth in Asia and the Pacific to 4.7% from 5.1%, placing much of the blame on the Iran war.
Philippine inflation remained above target at 6.8% in May, while Vietnam’s annual inflation rate rose to 5.6%. Indonesia’s headline rate is low, but a 32% increase in some non-subsidized fuels has raised cost-of-living concerns and put pressure on subsidies.
The economic impact is also unlikely to stop at farms or dinner tables. Temperatures above 40 °C (104 Fahrenheit) will also affect the region’s important tourism sector.
Dry weather may lead to agricultural and peatland fires in smog-producing hotspots such as northern Thailand, Sumatra and Indonesian regions of Kalimantan.
“A larger El Nino will increase the likelihood of severe transboundary haze. This will increase hardship among populations, where public health risks will increase, among other social issues,” Helena Varkey, associate professor of political ecology at Universiti Malaya, told DW.
The haze also tests regional diplomacy. Governments are often reluctant to restrict plantation activity too aggressively when farmers and companies are already under pressure from high input costs.
“Similarly when the COVID-19 pandemic coincides with haze events, governments may have difficulty balancing economic and social priorities,” Varkey said.
From climate shock to political pressure
As regional governments are already struggling to curb inflation, “this combination of climate shocks and geopolitical warfare destroys their fiscal breathing space,” said Lee of the Global Heat Health Information Network.
“Historically, throughout Southeast Asia, when the price of rice and fuel rises beyond a certain threshold, public frustration quickly turns into political instability,” Lee warned.
The warning comes after a year of youth-led unrest and anti-corruption protests in several Southeast Asian countries.
In Indonesia, students rallied again in Jakarta last week against President Prabowo Subianto’s spending plans and rising fuel prices and demanded lower fuel and food prices.
In the Philippines, an already tense confrontation between the two main political factions has escalated due to widespread public anger over a huge corruption scandal, while Malaysia’s Prime Minister Anwar Ibrahim has also raised the possibility of a snap general election if tensions rise within his ruling coalition.
“Governments face the real threat of mass protests, labor strikes in manufacturing hubs and intense domestic unrest that could destabilize administrations and overturn regional trade agreements,” Lee said.
Forecasts may change, and governments still have time to ensure water supplies, manage stocks, target subsidies and warn farmers before making planting decisions.
But the margin for error is decreasing. A strong El Niño, bringing with it expensive fuel and fertilizer, could turn Southeast Asia’s cost of living into the region’s next big political test.
Edited by: Keith Walker