Container shipping in the Red Sea has experienced a significant decline of almost 30% this year due to continuous attacks by Yemen's Houthi rebels, according to the International Monetary Fund (IMF). The director of the IMF's Middle East and Central Asia department, Jihad Azour, highlighted the accelerated drop in trade and emphasized the impact on global trade routes. The Houthi rebels, with Iranian backing, have carried out over 30 attacks on commercial and naval vessels since November 19, prompting concerns and rerouting strategies by some shipping companies.
The Suez Canal's total transit volume has seen a substantial 37% decrease this year through January 16 compared to the same period last year, as reported by the IMF's PortWatch platform. The Red Sea, a vital route handling approximately 12% of global trade, has faced disruptions, leading to increased uncertainty and potential shifts in trade patterns.
The United States, leading a coalition to protect Red Sea shipping, is considering diplomatic and financial pressure by designating the Houthis as a "terrorist" group. The European Union is also exploring measures, with maritime traffic through the Red Sea route declining by 22% in a month due to rebel attacks.
The IMF released a revised economic outlook for the Middle East and North Africa, projecting a 2.9% expansion in the region's economies this year, with concerns over the economic downturn in the occupied West Bank and war-ravaged Gaza Strip. The IMF anticipates further economic contraction in 2024 without a swift cessation of hostilities and reconstruction. Total funding requirements for emerging market and middle-income economies in the region are projected to rise to $186 billion in 2024, up from $156 billion in 2023.