Partial blockage of route to Suez Canal may not significantly impact current FY, Moody’s

Cairo – January 18, 2024: International ratings agency, Moody’s, believes that, while the partial Red Sea blockade is expected to impact Egypt's current account receipts through the Suez Canal, it may not significantly affect fiscal accounts for the current fiscal year (FY2023/2024).

It also shared its concerns over the potential negative consequences for businesses and consumers as the ongoing blockade by Houthi rebels continues to disrupt trade in the Red Sea, which could lead to increased transport and logistics costs, impacting businesses and potentially affecting consumers in Europe.

Moody’s stressed that further escalation may complicate Egypt's efforts to secure external financing, highlighting the country’s reliance on the Suez Canal - which contributes to around 2 percent of Egypt’s GDP and around 9 percent of the government's revenue for this fiscal year.

The Suez Canal recently revealed a 40 percent drop in revenues over the first two weeks of 2024 compared to the same period last year. Suez Canal Authority (SCA) head Osama Rabie shared that during the first 11 days of January, ship crossings decreased by 30 percent, and tonnage dropped by 41 percent year-on-year.

Moody's expects the European Union to be particularly affected by the partial disruption of the canal, with increased shipping and insurance costs impacting companies' profits and leading to potential cost increases for consumers.