Super El Niño Could Cost Thailand 100 Billion Baht

Krungsri Research forecasts that a super El Niño phenomenon will damage Thailand's economy from 2025 to 2026, potentially reducing GDP growth by 0.9 percent and causing economic losses exceeding 100 billion baht. The research warns of surging rice and palm oil prices that will impact households.

Krungsri Research indicates the world has entered an El Niño phase since the second quarter of 2025, with this occurrence expected to intensify to a severe level, potentially qualifying as a "super El Niño." This will have cascading effects on supply chains and Thailand's overall economy during 2025–2026. Major agricultural products at risk of significant damage in 2025 include rice, cassava, and palm oil, while key economic crops facing damage in 2026 are rice, sugarcane, and palm oil. The impact will also extend to agro-industrial, manufacturing, and service sectors both directly and indirectly. Food and beverage processing industries will face raw material shortages, and businesses in trade, restaurants, and hotels will suffer from agricultural product scarcity.

Both drought and flooding can raise inflation, as reduced agricultural output creates supply chain shortages, driving up prices for agricultural and agro-industrial products—particularly rice, sugar, vegetable oils, and fresh produce. This increases household consumption costs and business expenses across manufacturing and service sectors, both directly and indirectly, creating inflationary pressure in 2025 of approximately 0.09–0.12 percent above baseline and 0.21–0.30 percent above baseline in 2026. In practice, businesses often round up prices in whole-baht increments per unit, so actual inflation impacts could exceed initial forecasts.

When combined, drought and flooding will damage supply chains across the economy. Krungsri Research models three scenarios: In a mild case, severe El Niño and light 2025 flooding would cause 33.5 billion baht in losses, or about 0.18 percent of GDP; however, 2026 would see 117.9 billion baht in losses, or about 0.60 percent of GDP as El Niño subsides. In a severe case, very severe El Niño and 2025 seasonal flooding would cause 35.5 billion baht in losses, or 0.19 percent of GDP in 2025, rising to 127.1 billion baht, or 0.65 percent of GDP in 2026. In an extreme case, record-breaking El Niño in 2025 plus possible seasonal flooding could cause 40.1 billion baht in losses, or 0.21 percent of GDP; 2026 would see 136.5 billion baht in losses, or 0.69 percent of GDP from moderate La Niña conditions.