Egypt is grappling with the economic repercussions of the Israeli-Palestinian conflict, as the Suez Canal experiences a significant decline of up to 50 percent in revenue as Tel Aviv’s GDP witnessed a 19 percent contraction in the fourth quarter.

Houthi rebels, supported by Iran, have been targeting cargo ships in the Red Sea en route to the Suez Canal. This has led vessels to circumvent the channel and opt for the longer route around the Cape of Good Hope.

President Abdel Fattah al-Sisi stated on Monday that these attacks have resulted in a 40 to 50 percent reduction in Suez Canal revenue since the war broke out.

Given that nearly 15 percent of global sea trade typically traverses the Red Sea, the impact is felt on a global scale.

In the aftermath of the conflict between Israel and Hamas in Gaza, Israel’s economy contracted more than anticipated.

The Central Bureau of Statistics reported a slowdown in economic growth from the projected 3.5 percent to 2.5 percent, following the outbreak of the conflict on October 7.

The statistics body attributed the economic downturn to a decline in spending, travel, and investment in the final quarter of the previous year.

Private spending plummeted by 26.3 percent, exports fell by 18.3 percent, and there was a substantial 67.8 percent decrease in investment in fixed assets, particularly in residential buildings.

The construction sector faced challenges due to a shortage of labor, caused by military call-ups and a reduction in Palestinian workers. Additionally, government spending surged by 88 percent, primarily driven by war-related expenses and compensation to businesses and households.

The conflict, initiated by a surprise attack from Gaza, proved to be the deadliest in Israel’s history, claiming the lives of approximately 1,200 people.

Hamas, recognised as a terrorist group by Israel, the US, the European Union, and the UK, also took over 250 individuals, including men, women, and children, as hostages.