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WORLD> Middle East
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Financial crisis may end boom for Suez Canal
(Agencies)
Updated: 2008-10-20 15:59 Boosting Growth Egypt's government said this month it was maintaining its growth target at 6-7 percent for the current fiscal year, after growth of 7.2 percent in 2007/08.
However, as well as contagion from the global financial crisis, the country is struggling with a fiscal deficit and popular discontent over inflation, which was running at 21.5 percent in urban areas in the year to September. Prime Minister Ahmed Nazif said this month that the global downturn could impact the canal, as well as tourism and exports, all important sources of foreign currency. Demand for Chinese consumer goods from Black Sea countries such as Russia and Turkey and from Europe for Asian cars were main drivers of canal use, said Mark Page, director of liner shipping at Drewry Shipping Consultants in London. The United States, the world's largest energy consumer, imported a record 738 billion cubic feet of liquefied natural gas (LNG) in 2007, much of it through the canal from Qatar, the world's largest LNG exporter. Surging global shipping costs have also been a boon for the waterway, discouraging shippers from taking longer routes. But the Baltic sea freight index, which tracks sea freight prices to haul commodities like coal, iron ore, cement and grains on some key routes, fell to its lowest level in more than five years this month on fears a recession would slow trade. The index had hit record highs in June. "The shipping industry has already started to see a slowdown and a fairly dramatic fall in freight rates," said Emily Comyn, spokeswoman at the International Chamber of Shipping in London. "Coupled with falling steel prices and the seeming reduction in Chinese demand for iron ore and coal, the industry in general can probably expect a significant slowdown in the coming months, and this will of course be reflected in Suez Canal transits." |
