La Nina is likely to delay any chance of a pickup in the global economy this year. It will affect food and energy prices, not only in Australia where the country has been ravaged by floods, but also China. Food, energy and China: those are likely to be the three big casualties. La Nina is shaping up as the black swan event which will dominate the global economy for at least the first half of this year.
Australia's fruit and vegetable prices are likely to rise by 20-30% but because Australia is a big agricultural exporter, it's likely to have an impact on other markets. The UN Food and Agricultural Organisation reports that food prices are already higher than they were in 2008 when there were food riots around the world.
The weather phenomenon is hitting other parts of the world too. Bloomberg reports that heating oil futures have hit a 27 month high in anticipation of the impact of snowstorms in the United States. Xinhua reports that China has been experiencing extreme weather conditions, with long hot spells, storms and cyclones.
Consultant Benjamin Shorbet says China faces big social risks from food price inflation and food insecurity, all the result of imbalanced economic policy, poor agricultural practices and the effects of climate change and deforestation.
La Nina is likely to become the ultimate black swan if it creates upheaval in the world's most populated nation that's providing the demand holding the global economy together.
Worse still, meteologists say it's likely to extend into the second quarter. This could be just the beginning.
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