Report published September 24, 2026

El Niño’s Uneven and Noisy Economic Effects: Goldman Sachs Macro Analysis

Goldman Sachs · September 24, 2026

NOAA estimates a 98% probability of a very strong El Niño by year-end 2026, which historically delivers an adverse supply shock across Latin America by dampening growth and elevating food inflation. The regional growth impact averages -0.36pp over four quarters with stark divergences—sharper drags in Ecuador and Brazil versus gains in Argentina—while central bank policy reactions will depend on domestic inflation expectations rather than the climate shock alone.

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Finvaulta summarizes Goldman Sachs's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.

Key Takeaways

1.NOAA assigns a 98% probability to a 'very strong' El Niño episode developing by year-end 2026, which historically acts as an adverse supply shock across Latin America.
2.El Niño shocks weigh moderately on regional activity, shaving an estimated 0.36pp off LA7 real GDP growth over four quarters, with contractions concentrated in Brazil (-1.21pp) and Ecuador (-1.85pp), while Argentina experiences an expansion (+2.57pp).
3.Price pressures are largely concentrated in non-core food inflation (+1.40pp for LA7 over four quarters), with headline inflation rising 1.04pp, though country-level estimates display wide confidence bands and limited statistical significance.

A Very Strong El Niño Is Approaching
A Supply Shock with Uneven and Noisy Effects
Central Banks Face a Familiar Tradeoff
El Niño’s Uneven and Noisy Economic Effects
Latam and Global Macroeconomic Outlook
Consolidated Latin America Selected Economic Indicators
Global Macroeconomic Framework
Latam Country Data Tables
Argentina
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Latam Financial Markets Outlook
Latam Financial Markets Indicators (2014-2026)
Key Commodities Prices
Latin America Swap Rates
Latin America Forecasts
The Latin America Economics Team

Report data

Exhibit 4: El Niño Tends to Bring Softer Growth in Latin America, with Argentina as an Exception

Metric	Estimate	Context
Probability of Very Strong El Niño	98%	NOAA probability forecast for a very strong El Niño event by year-end
Cumulative Real GDP Response (LA7)	-0.36 pp	Average cumulative GDP growth impact across LA7 economies following an El Niño onset shock
Cumulative Real GDP Response (Brazil)	-1.21 pp	Four-quarter cumulative real GDP contraction in Brazil following an El Niño onset shock
Cumulative Real GDP Response (Ecuador)	-1.85 pp	Four-quarter cumulative real GDP contraction in Ecuador following an El Niño onset shock
Cumulative Real GDP Response (Argentina)	2.57 pp	Four-quarter cumulative real GDP expansion in Argentina following an El Niño onset shock