As the Israel-Hamas conflict continues to escalate, the repercussions are being felt beyond the immediate region, notably in Egypt. The ongoing hostilities between Israel and Yemen's Houthi rebels have intensified, particularly after the Houthis launched missile attacks on Israel, prompting a fierce response from the Israeli Air Force, which deployed around 100 fighter jets in retaliation [e5ce04db]. This conflict has severely impacted Egypt's economy, primarily through a dramatic decline in earnings from the Suez Canal, which has fallen by 60%, resulting in an estimated financial loss of approximately $7 billion [e5ce04db].
The Suez Canal is vital for Egypt, historically handling about 12% of global trade. However, since November 2023, the Houthis have conducted over 100 attacks on shipping vessels in the Red Sea, forcing many shipping companies to reroute their operations around South Africa to avoid the conflict [e5ce04db]. This has further exacerbated Egypt's economic challenges, which already include soaring inflation and a deepening financial crisis.
President Abdel Fattah el-Sisi, who has been in power since 2014, is facing increasing pressure as the economic situation deteriorates. He has appealed for assistance from India and Saudi Arabia to help stabilize the economy [e5ce04db]. Analysts have warned that Egypt could be heading towards a crisis reminiscent of the situation in Syria if the current trajectory continues [e5ce04db].
In the broader context, the ongoing Israel-Hamas conflict has already led to significant economic disruptions in Israel and Gaza, with Israel's economy contracting by 4.1% following the October 7 attack and Gaza's GDP plummeting by 86% [c4dcf0a2][5141bb2d]. The repercussions of these conflicts are now rippling through the region, affecting neighboring countries like Egypt, which is grappling with its own set of economic challenges amidst the turmoil [e5ce04db].