El Niño Warning: African Development Bank Sounds Alarm on Potential Economic Impact
The African Development Bank (AfDB) has warned that the expected powerful El Niño phenomenon could reduce the GDP of the most affected countries by 1% to 2% on average, equivalent to losses of $10 to $20 billion at the continental level. This would increase pressure on nations already facing debt crises and struggling to repay their loans.
Expected Consequences of El Niño
El Niño, which typically causes severe droughts, floods, and violent storms, is expected to become one of the most powerful climate phenomena ever recorded if the warming of Pacific waters continues at its current rate.
Financing Needs
Africa may need up to $100 billion in financing by 2026 to address the consequences of the expected phenomenon. The bank has warned of the risk of falling into the climate finance trap, where governments may be forced to divert credits allocated to health, education, and infrastructure sectors to address the consequences of climate disasters, given limited resources.
Economic Growth Projections
The AfDB had forecasted African economic growth of 4.2% in 2026 and 4.4% in 2027, assuming a mitigation of the intensity of the conflict in the Middle East. However, these projections were made before the emergence of scenarios announcing an exceptionally intense El Niño and without taking into account the renewal of hostilities between Washington and Tehran.
Key Takeaways
- The expected El Niño phenomenon could reduce GDP by 1% to 2% in the most affected countries
- Africa may need up to $100 billion in financing by 2026 to address the consequences
- The bank warns of the risk of falling into the climate finance trap, diverting credits from essential sectors
- Economic growth projections may be impacted by the expected El Niño phenomenon and geopolitical tensions.
