Intensifying El Niño Raises Economic Risks Across Latin America

In Central America's Dry Corridor—home to many smallholder families—corn and beans supply both household food and market income. Heat and water shortages damaged first-season plantings in El Salvador. Some farmers are attempting a second sowing but face uncertain returns because rain comes in short, unpredictable bursts.

Smaller harvests reduce food available for families and the volumes farmers can sell. Lower supplies can push prices up, while farms experiencing losses may hire fewer workers. Households and producers without reliable credit or assistance are particularly exposed.

Regional contrasts complicate the agricultural outlook. Brazil's forecast for September–November indicated below-average rainfall in parts of the north, northeast, central and southeastern regions, while southern areas could be wetter than usual. Those contrasts can leave major crops simultaneously vulnerable to drought in some areas and excess rain in others, affecting domestic supply and export volumes. Peru's central bank has already trimmed its 2026 growth forecast, citing coastal El Niño effects.

Reduced hydropower output shifts pressure to thermal plants, which can offset shortfalls but raise fossil fuel use and greenhouse gas emissions and may increase energy costs and fiscal strain. In Brazil, federal agencies are coordinating climate and water monitoring to inform preparedness and warnings.

Macroeconomic and social consequences

Economists and regional bodies warn that an extreme El Niño could translate climate impacts into losses across employment, incomes and prices. The UN Economic Commission for Latin America and the Caribbean estimated that a severe event could cost at least 2 percent of regional GDP and push millions into poverty.

Policy responses and immediate actions

Governments are combining emergency relief and preparedness. Peru declared a 60-day state of emergency in 607 districts and supplied livestock feed, vaccines, water-storage facilities and small dams. Venezuela's measures have included electricity-saving plans and calls for agricultural contingency steps. Brazil is emphasizing monitoring and public risk-awareness efforts.