Goldman Sachs is warning that Southeast Asia faces a food-supply shock from two converging pressures: higher oil and fertilizer costs tied to the Middle East conflict and a strong El Niño event expected in late 2026. The bank estimates the combined pressures could add 1 percentage point to regional food inflation within six months, building to 2.1 points after a year.
The oil-and-fertilizer double hit
The Middle East conflict has pushed oil prices higher and disrupted fertilizer shipments. That oil shock has already shown up in fuel-sensitive consumer-price-index items. Climbing fertilizer prices, in turn, raise costs for farmers across the region, squeezing margins and potentially reducing crop output.
El Niño odds and a warmer ocean
The World Meteorological Organization puts the odds of an El Niño event during June–August 2026 at 80%, rising to 90% through November. Development is more advanced now than at the same stage of previous super El Niño events in 2015, 1997, and 1982. Oceans are significantly warmer today, so the atmospheric response will likely differ from those past episodes.
Which economies are most exposed
Singapore and the Philippines rank among the most vulnerable because they depend heavily on imported food. Thailand imports more than 90% of its fertilizer, leaving it exposed to global price shocks through higher farm input costs. India faces weaker monsoon rains that may hit its sugar exports. Malaysia and Indonesia are better shielded by their palm oil industries, but without that sector they become net food importers.
A contrasting view from the FAO
Shirley Mustafa, an economist at the UN Food and Agriculture Organization, offers a more tempered outlook. She says global stocks and harvests of rice and other cereals could cushion the blow, suggesting the shock may not be as severe as Goldman projects. That leaves a key question open: will the cushion hold if both the oil-fertilizer squeeze and El Niño hit at full force?
