El Niño and its impact on the New Zealand economy
The Southern Oscillation Index is almost two standard deviations below its mean, suggesting that strong El Niño conditions are present. This Note collects together information and empirical insights on El Niño. El Niño conditions do not by themselves condemn New Zealand’s agricultural sector to a poor season. Serious east coast drought and excessive rainfall in the west does not occur during every El Niño, and regional impacts can vary from one event to the next. Nonetheless, it is appropriate to closely monitor climatic conditions during El Niño, given the heightened risk. Indeed, empirical analysis suggests that an El Niño of the current intensity could subtract something in the order of 0.3 to 0.8 percent from New Zealand’s GDP.