- Container shipping through the Red Sea has decreased by almost 30% in 2024 due to ongoing attacks by Yemen’s Houthi rebels, as reported by the International Monetary Fund (IMF).
- The Houthi attacks have led some shipping companies to reroute vessels around southern Africa to avoid the Red Sea, impacting a vital route handling approximately 12% of global trade.
Decline in Red Sea Container Shipping
Container shipping in the Red Sea has witnessed a significant drop of nearly 30% in 2024, according to the International Monetary Fund (IMF). Jihad Azour, Director of the IMF’s Middle East and Central Asia department, highlighted the acceleration of this decline at the beginning of the year. The Houthi rebels, supported by Iran, have launched more than 30 attacks on commercial shipping and naval vessels since November 19, contributing to the decrease in trade volume.
Impact on Global Trade and Rerouting Measures
The IMF’s PortWatch platform indicates a 37% reduction in total transit volume through the Suez Canal this year until January 16 compared to the same period in the previous year. The Red Sea route, which typically handles about 12% of global trade, has seen some shipping companies opting to detour around southern Africa to avoid the heightened risks associated with the ongoing Houthi attacks. The uncertainty created by these attacks has raised questions about potential changes in trade routes and their long-term sustainability.
International Response and Economic Outlook
In response to the Houthi attacks, the United States leads a coalition aimed at protecting Red Sea shipping. Efforts include diplomatic and financial pressure to designate the Houthis as a “terrorist” group. The Red Sea is crucial for European trade, and last week, the European Union reported a 22% decline in maritime traffic through the Red Sea shipping route within a month due to rebel attacks. The EU is considering launching its naval mission in the Red Sea to safeguard international shipping. The IMF’s revised economic outlook for the Middle East and North Africa reflects a 2.9% expansion in regional economies in 2024, down half a percentage point from the October forecast. The economic downturn in the occupied West Bank and Gaza Strip is substantial, with real GDP growth estimated to have dropped to about minus 6% in 2023, reflecting a 9-percentage point downgrade from the previous outlook. Continued economic contraction is projected for 2024 without a swift cessation of hostilities and reconstruction efforts. The IMF indicates total funding requirements for emerging market and middle-income economies in the region to be $186 billion in 2024, up from $156 billion in 2023.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: VOA News
