Egypt: in 2024, Houthi attacks should reduce Suez Canal revenues by 60%

Egypt: in 2024, Houthi attacks should reduce Suez Canal revenues by 60%
Egypt: in 2024, Houthi attacks should reduce Suez Canal revenues by 60%

This is called a “collateral damage“. Israel’s war in Gaza has a negative impact on the Egyptian economy, particularly on these two financial resources: tourism and especially the income generated by Suez Canal transit rights. It should be borne in mind that more than 12% of world trade passes through the Suez Canal.

However, with Israel’s war in Gaza and attacks by the Houthis against ships using this sea route, maritime traffic has fallen sharply.

After the start of attacks against ships using this sea route, four of the five largest shipowners in the world decided to change the trajectories of their ships, preferring to bypass Africa. A situation which results for them in an extension of the duration of the journey by at least 10 days and therefore significant additional costs in fuel, salaries and crew support.

Read also: Hard blow for Egypt: the Suez Canal deserted after attacks by Yemeni rebels

According to a report from the Allianz insurance group, unveiled this Wednesday, May 22, “more than a hundred boats have been targeted by Houthi rebels in the Red Sea, in response to the ongoing conflict between Israel and Hamas in Gaza. These attacks have seriously affected transit through the Suez Canal, down 40% by the start of 2024“.

The consequences on revenues generated by rights of way are significant. The Egyptian authorities expect, after a year 2023 which recorded a record revenue from the maritime passage which connects the Red Sea to the Mediterranean of around 10 billion dollars, to a catastrophic year 2024.

Read also: Egypt: Suez Canal generates $9.3 billion in revenue

Thus, according to the Egyptian Minister of Finance, Mohamed Maait, revenues generated by the Suez Canal should drop by around 60%. Last April, Minister of Planning and Economic Development Hala El-Said announced that revenues from the Suez Canal had seen a 50% drop due to tensions in the Red Sea.

This situation has negative impacts on Egyptian foreign exchange revenues which are dependent on four main resources: export revenues, diaspora transfers, tourism revenues and revenues generated by the Suez Canal.

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