Analysis of El Niño-Southern Oscillation Phenomena’s Effect on the Gross Domestic Product of Western Pacific Nations

Abstract:

El Niño Southern Oscillation (ENSO) is a climatological phenomenon that occurs in the tropical Pacific Ocean which has a direct influence on the climate of western Pacific nations. This study evaluated the meteorological effects of ENSO on the economies of Indonesia and the Philippines. It was hypothesized that decreased precipitation in the western Tropical Pacific region during El Niño events causes decreases in agricultural production in the region resulting in a negative effect on a nation’s Gross Domestic Product (GDP). Furthermore, during La Niña events, when precipitation increases, an increase in the nation’s agricultural GDP and overall GDP is expected.

Annual GDP data were obtained from the World Bank and the Bank of Indonesia for 1960-2012. Sea surface temperatures (SST) data, in the Niño 3.4 region, were obtained from the National Oceanic and Atmospheric Administration (NOAA) National Climate Data Center.

Data of the agricultural and total GDP of Indonesia and the Philippines had inconclusive correlations with ENSO signal data. By examining data between smaller time segments of the overall 1960-2012 timeframe, more conclusive results could not be discerned.

 Indonesia’s quarterly non-oil GDP for 2000-2009 was independently correlated with ENSO providing better insight on the variables’ relationship during discrete ENSO phenomena. The results provided strong correlation coefficients of 0.831 and 0.624 in support of the antithesis as well as -0.421 in support of the hypothesis. An economic anomaly known as the East Asian Financial Crisis may have been the cause of the unexpected correlations however more data is needed to be certain.

Overall, the results demonstrated weak to moderate correlations between studied variables. However, more data is needed to reach substantial conclusions.