Fitch forecasts slump in Suez Canal revenues amid regional unrest

Updated 1/28/2024 5:30:00 AM

Arab Finance: Fitch Ratings forecasts Egypt’s revenues from the Suez Canal to decline to $9 billion during the current fiscal year (FY) 2023/2024 due to the Gaza-Israel conflict and the continuous attacks by Houthis in the Red Sea, the agency highlighted in an insight.

The ratings agency also expects Egypt’s tourism revenues to drop to $12.7 billion in the same period.

In case the disruptions and pressures sustained throughout the first half of 2024, tourism revenues could fall further to $11 billion and revenues from the Suez Canal could drop to $7.5 billion.

For his part, Chairman of the Suez Canal Authority (SCA) Osama Rabie told Asharq Business that the canal’s revenues may decline to $6 billion this year, compared to $10.250 billion in 2023, amidst rising security threats in the Red Sea.

He added that the number of ships passing through the canal decreased by 34% year on year (YoY) this January.

In January, the Suez Canal revenues declined by 44% from $802 million in the same month last year.

In addition, Egypt’s treasury bills are likely to remain out of favor for a longer period due to the continued tensions in the Red Sea, after they were previously attractive to emerging market investors, according to Bloomberg.

Moreover, the United Nations Conference on Trade and Development (UNCTAD) revealed that vessels passing through the Suez Canal have decreased by 45% during the past two months as a result of the Houthi attacks in the Red Sea.

As for S&P Global Ratings, it said that the disrupted maritime traffic in the canal exacerbated a foreign currency shortage in Egypt.