El Nino Forecast Brings Australia Economy Warning

Australia's economy could face a significant hit of about $13.4 billion over the next two years due to the expected strengthening of El Nino, according to Commonwealth Bank analysis.

The weather phenomenon is forecasted to bring drier conditions, leading to higher prices and lower economic growth in the agricultural sector.

Farmers are already preparing for the worst by reducing their planting area and changing their cropping mix to less water-intensive grains such as wheat and barley.

Rabobank senior grains analyst Vitor Pistoia warned that this could limit farmers' income potential, while others like National Farmers Federation president Hamish McIntyre are selling off older animals and building up stores of livestock feed in preparation for the dry conditions.