Suez Canal Revenues Plummet by 25% Amid Regional Tensions
The Suez Canal, a crucial maritime route, has seen a significant decline in revenues, dropping to $6.6 billion for the fiscal year ending in June 2024, a stark decrease of 25% from the previous year’s earnings of $8.8 billion, according to the Central Bank of Egypt. This downturn is attributed to ongoing geopolitical tensions, particularly in the Red Sea region, which have severely impacted shipping activities.
President Abdel Fattah El-Sisi highlighted the dire situation, stating that Egypt has lost approximately $6 billion in canal revenues over the first eight months of 2024 alone. He noted that the canal's revenue loss could be as high as 50-60% due to the escalating conflicts affecting maritime security. The Suez Canal is vital for global trade, serving as the shortest route between Europe and Asia, thus its financial health is critical for Egypt’s economy.
The geopolitical climate has worsened with the Houthis targeting Israeli-linked vessels in the Red Sea in solidarity with Gaza, which has been embroiled in conflict since October 7, 2023. This has led to increased military actions from the U.S. and U.K. against Houthi positions, further complicating the security situation in the region. The Houthis have also declared that they consider all American and British ships as military targets, expanding their operational scope to include vessels transiting through the Indian Ocean.
In addition to the challenges facing the Suez Canal, the Central Bank of Egypt reported a widening current account deficit, which jumped to $20.8 billion for FY2023-24, compared to $4.7 billion the previous year. While foreign direct investment surged to $46.1 billion, up from $10 billion, remittances from Egyptians abroad slightly decreased, and tourism revenues experienced a modest increase, highlighting mixed economic signals for the country.
