May 1, 2022, Indonesian supermarket. Economist Mohamed Faiz Nagsa said compared to other countries, food consumption accounts for a large portion of people’s expenditures in countries such as Indonesia, the Philippines and Vietnam.
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Southeast Asia is likely to face food supply shocks. This is because, in addition to soaring oil and fertilizer prices due to conflicts in the Middle East, food prices will also soar due to the effects of the strong El Niño phenomenon expected in the second half of 2026. goldman sachs.
“The oil crisis from the Middle East conflict is showing up in fuel-sensitive CPI items, and higher fertilizer prices will increase farm input costs,” Goldman said, adding that this will force governments in the region to rethink food-fuel trade-offs.
The investment bank added: “A strong El Niño event could occur in the second half of 2026, potentially triggering new food supply shocks in the same way oil and fertilizer pressures are moving through the food chain.”
Among Southeast Asian countries, the central bank expects Singapore and the Philippines to be directly exposed to global food price shocks due to their status as net food importers.
Other regions in Southeast Asia also remain vulnerable to food price shocks. Malaysia and Indonesia may seem more isolated because of their palm oil industries, but if the palm oil sector is not taken into account, both would be net food importers, the report said.
More than 90% of Thailand’s fertilizers are imported, Goldman said, exposing the country to global food price shocks through rising food input prices.
Fuel shortages caused by the Iran war are likely to show up in food prices. According to a paper from the London School of Economics and Political Science, changes in oil prices are transmitted rapidly along the supply chain because energy is a major production input and transportation cost for goods such as food.
Continued disruptions to oil supplies could further increase prices and impact availability of fertilizers from the Middle East, according to the OECD report. “This could impact the 2026-2027 planting and harvest season, leading to lower yields and higher food prices in the long term,” the report said.
The Goldman report estimates that, when shocks from oil and fertilizer fluctuations and the effects of El Niño are combined, food inflation in Southeast Asia would rise by an average of 1 percentage point after six months, 2.1 percentage points after 12 months, and slow to 2 percentage points after 18 months.
The report added: “These estimates should not be interpreted as a prediction of overall food inflation, but as additional pressures on top of normal food inflation trends.”
