According to recent statements by the Egyptian Minister of Planning, the Suez Canal is suffering a major crisis due to a 50% drop in revenue due to “the tension in the Red Sea”, to which is added the high skirmishes in the region due to the war between Hamas and Israel.
The Suez Canal, which is considered one of the most important sea routes for world trade, is affected by multiple attacks by the Houthi group on commercial ships linked to Israel. But revenues have also been diminished by multiple US retaliatory airstrikes in the Red Sea.
Israel’s counteroffensive in the Gaza Strip does not help Egypt’s numbers in terms of trade either. Not only is Egypt focusing efforts on reaching a ceasefire in the region along with other countries, but also the constant Israeli aerial bombardments affect the entire population and cause the massive displacement of affected people to different nations in the Middle East. .
The Suez Canal is not only one of the main sources of foreign currency for Egypt, but also the shortest shipping route between Europe and Asia. From the moment of its opening as such, it gained fundamental economic relevance since the main products transited through it from one continent to another. The nationalization of the Canal in the hands of then President Nasser in 1956 allowed Egypt to position itself even further in regional terms, and between 2014 and 2015 it was expanded to multiply its daily transit capacity.
A similar situation involved the jamming of the Ever Given, one of the largest container ships ever built, in Egypt in 2021. When it happened, the ship paralyzed global shipping and froze almost $10 billion of trade a day, highlighting that Canal trade accounted for 2% of Egypt’s GDP at the time. Today, the tension in the Red Sea and the Middle East and what it implies economically for Egypt recall that year, although it is possibly a much longer-lasting issue than the six days of jam last 2021.
You may be interested in: Reforms in Nigeria, Türkiye, Argentina and Egypt increase the prospects for global economic growth
