According to a report by Goldman Sachs, Southeast Asia is facing a looming food-supply shock driven by increased oil and fertilizer prices stemming from the ongoing conflict in the Middle East. The report highlights that these rising costs will pressure governments to reassess the balance between food and fuel.
Additionally, the potential for a strong El Niño event in late 2026 could exacerbate food supply issues just as the effects of current oil and fertilizer price increases begin to stabilize. The report indicates that Singapore and the Philippines, as net food importers, are particularly vulnerable to fluctuations in global food prices.
Other countries in the region, including Malaysia and Indonesia, may also face risks, especially if their palm oil industries are excluded from consideration. Thailand's reliance on imported fertilizers further exposes it to global food price shocks.
Goldman Sachs estimates that the combined effects of these factors could add an average of 1 percentage point to food inflation in Southeast Asia after six months, rising to 2.1 percentage points after a year, before moderating. These figures represent additional pressure on food inflation trends rather than total inflation forecasts