In recent weeks, a series of attacks by Houthi militants, backed by Iran, has severely affected maritime transport in the Red Sea, a crucial route for global trade that handles approximately 12% of the world’s maritime traffic.
These attacks result in consequences that impact the global economy and international trade. In the following blog, we will discuss some of these consequences and the context of these confrontations.
Disruptions in the Maritime Route
These attacks have had a significant impact on various industries, from major liquefied natural gas exporters in Qatar to grain producers in Argentina. Since November, the Houthis have launched offensives against ships transiting this vital route, in an attempt to show solidarity with the Palestinian population in Gaza affected by the conflict with Israel.
The consequences of these attacks not only affect Western ships but also the global economy in general. Maritime trade is crucial for the circulation of goods and products between continents, and any disruption in these routes can have significant repercussions.
Repercussions on Maritime Transport
Insecurity in the Red Sea has forced many shipping companies to reconsider their routes. Some have opted to divert their ships to alternative routes, such as the one that skirts the southern tip of Africa, resulting in significant additional costs. Those that continue to use the Red Sea have increased their rates due to the high risk.
Global Economic Consequences
The economic impact of these attacks is starting to be felt. Although initially considered “insignificant,” the persistence of these attacks could have more severe consequences. According to an analysis by Oxford Economics based on estimates from the International Monetary Fund (IMF), the increase in freight costs could raise inflation by 0.6 percentage points in the coming year.
This scenario suggests that although a prolonged closure of the Red Sea would not prevent the decline of inflation, it would slow its normalization. This is a crucial aspect to consider for the global economy, as the stability of maritime routes is fundamental for global trade and inflation control.
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