Citi: El Niño Phenomenon Poses Chain Supply Shocks

Glonghui, June 26｜Citigroup released a report stating that the interim agreement between the United States and Iran has alleviated some key obstacles to the global economy. Nevertheless, it is still too early to say that challenges are a thing of the past. The sustainability of the agreement remains to be seen, and the conflict has already caused damage to infrastructure in the Middle East. The good news is that the global economy has weathered a period when oil prices remained consistently above $100 per barrel, and the bank estimates that the current global economic growth rate is about 2.5%, down from 2.9% before the conflict. Meanwhile, the global economy may be facing a new risk. The National Oceanic and Atmospheric Administration (NOAA) has determined that there is more than a 95% chance that the El Niño phenomenon will persist until March 2027, and a 63% chance that it will reach severe or super-strong intensity by the end of the year. Historically, El Niño events of this severity have caused significant and long-lasting economic costs by disrupting agricultural output, energy production, supply chain logistics, and reducing labor productivity.