Thai drought could shave off 0.2% of GDP

Thailand is preparing for a potential drought that could last years and impact global supplies of sugar and rice.

Key Takeaways

• Thailand is at risk of a prolonged drought that could significantly impact global supplies of sugar and rice.
• Rainfall in the country is expected to be 10% below average this monsoon season, with the possibility of further decreases due to the El Niño weather pattern in the coming years.
• The government is urging farmers to conserve water and avoid planting a second rice crop to mitigate the potential impact on inflation and economic recovery.
• The El Niño phenomenon is responsible for disrupting weather patterns and causing drier conditions in various parts of the world, including Thailand.

Thailand is expecting below-average rainfall this monsoon season and the onset of the El Niño weather pattern could worsen the situation over the next two years.

The country is facing widespread drought conditions starting in early 2024, posing risks to the economy and inflation. Farmers are advised to conserve water and avoid planting a second rice crop. Thailand’s position as the world’s second-largest supplier of rice could also be threatened.

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According to experts, a severe El Niño could have a negative impact on the economy, potentially reducing the gross domestic product by 0.2 percentage points this year. This is due to the possibility of drought conditions coinciding with seasonal production, particularly for rice, in the second half of the year.

El Niño occurs on average every two to seven years, and episodes typically last nine to 12 months. It is a naturally occurring climate pattern associated with warming of the ocean surface temperatures in the central and eastern tropical Pacific Ocean. But it takes place in the context of a climate changed by human activities.

In anticipation of the El Niño event, a WMO report released in May predicted that there is a 98% likelihood that at least one of next five years, and the five-year period as a whole, will be warmest on record, beating the record set in 2016 when there was an exceptionally strong El Niño.

The WMO warns that governments should prepare for the impacts on health, ecosystems, and economies. It is also predicted that the next five years will likely be the warmest on record, with a possibility of exceeding 1.5°C above pre-industrial levels. El Niño typically brings increased rainfall to some regions and severe drought to others, as well as influencing hurricane formation. The current El Niño event is expected to be of at least moderate strength.

The drought may impact crops such as sugar and rubber, and could jeopardize Thailand’s position as the world’s second-largest rice supplier. The lack of long-term mitigation efforts to deal with extreme weather events in Thailand is a concern, according to the World Bank.