(MENAFN) Recent data released by the International Monetary Fund (IMF) indicates a notable decline in trade volumes through key maritime routes, with the Suez and Panama Canals experiencing significant drops during January and February of 2024. According to the IMF's findings, transit trade via the Suez Canal saw a 50 percent decrease, while the Panama Canal recorded a 32 percent decline compared to the same period in 2023. These declines have been attributed to a combination of factors, including Houthi attacks in the Red Sea and drought conditions affecting the Panama Canal.
The IMF report highlights the impact of attacks on vessels in the Red Sea region, which have led to decreased traffic through the Suez Canal. The Suez Canal, a vital artery connecting Asia and Europe, normally facilitates approximately 15 percent of global maritime trade. However, rerouting vessels around the Cape of Good Hope has become necessary for many shipping firms, resulting in extended delivery times by more than ten days.
Simultaneously, the Panama Canal has been grappling with pronounced drought conditions, prompting authorities to implement significant limitations on daily ship transits since October of the previous year. This situation has hindered maritime trade through the canal, which typically facilitates around 5 percent of global maritime trade between the Atlantic and Pacific Oceans.
The IMF warns of the potential consequences of these disruptions on various fronts, including inflation rates and global trade dynamics. Rising shipping costs due to rerouted vessels and reduced throughput at the Panama Canal could lead to upward pressure on inflation, impacting companies with constrained inventories. Moreover, the disruptions may temporarily hamper supply chains in affected countries, complicating global trade and economic activity statistics.
Given these challenges, the IMF emphasizes the need for proactive measures to address the disruptions and mitigate their adverse effects on global trade and economic stability. Efforts to enhance maritime security in the Red Sea region and address water management issues at the Panama Canal are essential to restoring normal trade flows and minimizing disruptions in the future.
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