The Suez Canal — a manmade waterway responsible for around 12% of global trade and 30% of all container cargo — is one of the main engines powering the Egyptian economy. But since the Iran-backed Houthi rebels in Yemen stepped up their attacks on ships in the Red Sea beginning in mid-November, hundreds of ships have diverted their cargo around the southern tip of Africa instead of going through the sea and the Suez Canal. The diverted route adds at least 10 days to the journey and is much more expensive. The rebels say they are attacking ships bound for Israeli ports in response to the country's assault on Gaza.
Ali Metwally, an economic consultant at IBIS Consultancy, said that Egypt’s transportation sector, which is heavily reliant on the canal, witnessed a reduction in vessel transits by approximately 30% in January 2024. Egyptian President Abdel Fattah al-Sisi said at an oil conference Tuesday that Suez Canal revenues are down by 40% to 50%.
“Consequently, the FY2023/24 current account deficit forecast has been revised from 2.6% to 2.9% of GDP, representing a monthly loss of at least $300 million until March/April 2024,” Metwally told Al-Monitor.
Mirette Mabrouk, a senior fellow and founding director of the Middle East Institute’s Egypt Studies program, agrees that the Red Sea crisis has been terrible for Egypt’s economy.
