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Israeli-Gaza conflict takes toll on global trade as Red Sea container shipping plummets by 30%

The International Monetary Fund (IMF) disclosed that the maritime transport of containers through the Red Sea has witnessed a drastic decline of approximately 30% within just one year.

TAS News Service

info@thearabianstories.com

Thursday, February 1, 2024

Muscat – The announcement, made by Jihad Azour, the Regional Director for the Middle East and Central Asia at the IMF, sheds light on the profound repercussions of the Israeli war on the Gaza Strip.

Azour emphasized that most shipping activities in the Red Sea, particularly container traffic, experienced a substantial 30% downturn, with the decline in trade intensifying at the outset of 2024. The PortWatch platform, an arm of the IMF, further reported a staggering 37% decrease in navigation volume through the Suez Canal from January 1 to 16, 2024, compared to the previous year.

The Pentagon has weighed in on the matter, acknowledging that the conflict in Gaza has disrupted maritime traffic in a crucial region responsible for facilitating up to 12% of global trade. This disruption has compelled shipowners to reroute, circumventing Africa to reach Asia and Europe, leading to escalated transportation costs and prolonged delivery times.

Jihad Azour expressed deep concerns about the prevailing uncertainty, stating, “The level of uncertainty is very high, and the evolution of the situation will determine the extent of change and adjustment in trade patterns in terms of volume, but also in terms of sustainability.”

Beyond the impact on global trade, Azour highlighted the dire economic consequences of the Israeli war on Palestine. The economic slowdown in Gaza and the occupied West Bank has been described as “tremendous.” In 2023, the gross domestic product in the Palestinian territories contracted by about 6%, according to revised projections by the IMF. Azour cautioned that unless there is a swift cessation of hostilities and a robust reconstruction effort, the economy will likely continue contracting in 2024.

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