Kuala lumpur: A potentially record-strength El Nino could impact economic growth in Malaysia, Indonesia, and Thailand from late 2026 into the third quarter (3Q) of 2027, with Indonesia and Thailand likely to experience effects earlier than Malaysia.

According to BERNAMA News Agency, CIMB Investment Bank Bhd highlighted in its CIMB Treasury and Markets Research report that the Relative Oceanic Nino Index (RONI) is projected to peak between 2.5°C and 3.0°C in November and December 2026. This climatic phenomenon is expected to result in rainfall stress in Indonesia starting in the third quarter of 2026, followed by Malaysia and Thailand in the first quarter of 2027.

The report further indicated that the gross domestic product (GDP) could be adversely affected by the El Nino, with impacts continuing from late 2026 into the third quarter of 2027. Specifically, assuming a peak RONI of 2.5°C, the quarterly GDP growth in Thailand is anticipated to decrease by around 0.4 percentage points, while Indonesia might see a reduction of 0.3 percentage points in the first quarter of 2027.

Malaysia is expected to feel the effects slightly later, with the potential for a 0.2 percentage point decrease in quarterly GDP growth at its peak in the third quarter of 2027. Despite the anticipated economic challenges, CIMB noted that the broader demand effects from El Nino have historically been limited.

Nonetheless, the investment bank warned that growth risks remain skewed to the downside, primarily due to factors such as increased fertiliser costs, water shortages, and haze, all of which are associated with adverse El Nino conditions.