Singapore: El Ni±o 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, noted in a statement that the Philippines, Indonesia, and Thailand are among the ASEAN economies with higher exposure to El Ni±o. Meanwhile, Malaysia and Vietnam face meaningful but more concentrated risks.

Higher food prices "can add to regional inflationary pressures, with imported inflation risks also rising considering most of this region are net food importers," she stated. Apart from Thailand and Vietnam, major economies in the region are generally net rice importers, leaving the Philippines, Malaysia, and Indonesia exposed to potential terms-of-trade shocks from higher rice prices.

She further explained that most economies in the region are large net grain importers, including ASEAN-6, and are particularly vulnerable to imported inflation pressures when global wheat and maize prices rise. 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 growth impact is expected to be more uneven and largely concentrated in agriculture. Indonesia, the Philippines, Thailand, and Vietnam, which have relatively large agricultural sectors, are more vulnerable to production losses and weaker rural incomes. However, agricultural exporters such as Indonesia, Malaysia, Thailand, and Vietnam could receive some offset 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," Venkateswaran concluded.