It's official: El Niño slows global economy, mounts losses in trillions of dollars

Long-term effects of El Niño

The last major El Niño was in 2016, which also set the record for the hottest year. In the following years, global warming has become a larger problem, and with the world exiting an extended La Niña, the colder counterpart of the oscillation, El Niño is set to make a comeback this year.

The far-reaching weather changes caused by El Niño are known to cause floods, droughts, a drop in fish populations as well as an increase in tropical diseases. The researchers at Dartmouth, however, wanted to put a number on the financial losses caused by the warm ocean band.

The researchers spent over two years analyzing the global economic activity following similar events between 1982-83 and 1997-98. They found that economic activity was slowed even five years after the event. The global economy slowed down by $4.1 trillion and $5.7 trillion dollars after El Niño events in the two years studied, respectively.

In the U.S., the two events led to a drop in gross domestic product (GDP) by approximately three percent. However, the impact on tropical nations such as Peru and Indonesia was more pronounced and led to a decline of more than 10 percent, the study found.

"We can say with certainty that societies and economies absolutely do not just take a hit and recover," said Christopher Callahan, a doctoral candidate in geography at Dartmouth College who was involved in the study. The data collected by the team suggests that a downturn after El Niño could even last as long as 14 years.

For the 2023 El Niño, Callahan predicted: "a major economic toll that depresses economic growth in tropical countries for potentially up to a decade. The result could be trillions of dollars in productivity lost globally".

The study was published in the journal Science.