RIYADH: Houthi attacks on cargo ships have cut Red Sea container traffic by almost 30 percent, according to an International Monetary Fund official.     

Speaking in a press briefing titled “Regional Economic Outlook for the Middle East and North Africa, January 2024 Update”, the director of the IMF’s Middle East and Central Asia department, Jihad Azour, set out how the Israel-Hamas war is causing adverse economic consequences on the broader region.   

The comments came a few days after the UN revealed the volume of commercial traffic passing through the Suez Canal has fallen more than 40 percent in the last two months after attacks by Yemen’s Houthi rebels.    

The Houthi rebels say they are targeting what they consider Israeli-linked commercial and military shipping in the region in solidarity with Palestinians in Gaza, pushing some cargo carriers to take longer and more expensive routes to avoid the attacks, according to an Agence France-Presse report on Jan. 26.   

During the press briefing, Azour said: “As you know, the large traffic in the Red Sea is on the container shipping, which has declined by almost 30 percent.”  

He went on to highlight that: “The decline in volume of shipping as well as also the increase in shipping cost, this is affecting both the value chains and we saw certain number of sectors affected affecting certain number of economies.”  

Egypt is facing disruptions in terms of revenues from the Suez Canal, and there are also additional delays in providing goods and services from China, the director stressed.   

“This impact, I would say, is differentiated between countries depending on their reliance on China or Asia med lines and also depending on the size of those economies in terms of import,” Azour disclosed. 

He also underlined that, “If this trade issue will escalate, this could have an increased impact on economies in the region both in terms of increasing their cost of import, cost of production, as well as also declining certain level of revenues for a certain number of Middle East and Africa countries.” 

According to the recently released IMF report in January, trade passing through the Suez Canal, connecting the Red Sea to the Mediterranean Sea, accounted for approximately 12 percent of global trade during the first half of 2023.  

Around 15 percent of world shipping traffic transits via the Suez Canal, the shortest route between Europe and Asia, making it a crucial source of foreign currency for Egypt.