El Niño: good boy or bad?

Cashin, P., Mohaddes, K. and Raissi, M.

The current El Nino (Spanish for "The Boy") -- a band of above-average ocean surface temperatures that develops every 3 to 7 years off the Pacific coast of South America and lasts about two years -- is causing major climatological changes around the world. Climate experts are continuously monitoring the developments of the 2015-2016 El Nino, which is one of the most severe events in the past 50 years and, notably, the largest since the 1997-1998 episode that shocked global food, water, health, energy, and disaster-response systems. In a recent IMF study, we examined variations in weather-related events -- with a special focus on El Nin0 -- over time and across different regions to identify their impact on growth, inflation, energy prices, and nonfuel commodity prices, motivated by growing concern about their effects on commodity prices and national macroeconomies. An El Nino typically brings drought to the western Pacific (including Australia), rains to the equatorial coast of South America, and storms and hurricanes to the central Pacific.