El Niño could cost Australia $13.4 billion in economic output
Commonwealth Bank warns El Niño will cut Australian economic output by $13.4 billion over the next two years.
If El Niño strengthens as forecast, Australia's economy will shrink by about 0.45 percentage points below where it would otherwise be, CBA analysis shows. Winter crops were mostly planted before the climate shift, so this year is forecast as the fourth-best harvest on record.
The 2027 crop could face far worse damage if dry conditions persist through summer and spring. Farmers are already cutting back planting area and switching to water-efficient grains like wheat and barley instead of higher-value crops like canola and chickpeas, limiting income potential.
Livestock sent to slaughter rises in drier times, pushing down prices, though beef stays elevated due to record US export demand. Using the 2002/03 drought as a guide, economists predict El Niño could add 0.25 percentage points to inflation, further hampering efforts to bring it back to the RBA's 2.5 per cent target.
- 13.4 billion dollars
- Economic hit
- 0.45 percentage points
- GDP reduction
- 61 million tonnes
- 2026 harvest forecast
- 0.25 percentage points
- Inflation pressure
Why it mattersFarmers face hardship, household food prices rise, and national economic growth slows if forecasts prove accurate.
AustraliaDirect threat to farm income, food costs, and Australia's economic growth through 2027 as drought pressure builds.
✓ Claims checked against the source. checked 1 h ago
Open this story in InSnip →
