According to the International Monetary Fund, container shipping in the Red Sea has decreased by approximately 33% due to ongoing assaults by Yemen’s Houthi insurgents. This information was reported on Wednesday.

Jihad Azour, director of the IMF’s Middle East and Central Asia department, stated that there has been a decrease of nearly 30% in container shipping. He also noted that this decline in trade has intensified since the start of the year.

According to the Pentagon, the Houthis, who are supported by Iran, have initiated over 30 assaults on both commercial and naval ships since November 19.

The rebels claim that their actions are in support of the Palestinians and as a form of protest against the ongoing Israel-Hamas conflict in the Gaza Strip since October.

According to the IMF’s PortWatch platform, the overall amount of goods passing through the Suez Canal decreased by 37% in comparison to the previous year, as of January 16.

The waterway links the Red Sea and the Mediterranean Sea.

Due to Houthi attacks, certain shipping companies are choosing to take alternate routes away from the Red Sea, which is a crucial pathway responsible for transporting approximately 12% of worldwide trade, as reported by the International Chamber of Shipping.

Azour stated in an online briefing that the level of uncertainty is very high. The outcome of current developments will greatly impact the changes and shifts in trade patterns, both in terms of volume and sustainability.

“Is the potential for significant shifts in trade routes imminent,” he inquired, “or is it a temporary result of rising expenses and declining security measures?”

Revised regional outlook

The US is leading a group of countries to safeguard shipping in the Red Sea and is attempting to use political and economic influence by reclassifying the Houthis as a “terrorist” organization.

The European trade heavily relies on the Red Sea.

The European Union’s trade commissioner recently reported a 22% decrease in maritime traffic along the Red Sea shipping route due to rebel attacks.

The European Union is advocating for the implementation of a naval mission in the Red Sea in order to safeguard global shipping.

The plan has received preliminary support from EU countries and they are working towards finalizing it at a meeting of the bloc’s foreign ministers on February 19.

The US and UK have continuously attacked the Houthi capabilities in Yemen, yet the movement supported by Iran remains capable of targeting ships.

The IMF gave a briefing on Wednesday along with a new economic forecast for countries in the Middle East and North Africa in light of the Israel-Hamas conflict.

The IMF has revised its forecast for the economic growth of the region this year to be 2.9%, which is 0.5% lower than their previous prediction in October.

According to Azour, the economic impact on the West Bank and Gaza Strip, which are currently under occupation and have been affected by war, was significant.

According to the IMF, the real GDP growth in Gaza and the West Bank is expected to have decreased by around 6% in 2023. This is a significant decline of 9 percentage points from their previous prediction in October.

Azour stated that unless there is a swift end to hostilities and efforts to rebuild, the economy will continue to decline in 2024.

According to the IMF, the total amount of funds needed for emerging market and middle-income economies in the region is projected to be $186 billion in 2024, which is an increase from $156 billion in 2023.