Page 74 - RusRPTApr24

5.0 External Sector & Trade 5.1 External sector overview
Disruption to world trade from the attacks on shipping in the Red Sea has increased, but so far the impact appears manageable and analysts expect a gradual recovery in goods trade this year. Still, the disruption to Red Sea routes alongside other factors means risks are skewed to the downside.
The volume of trade travelling through the Suez Canal has dropped significantly as shippers have re-routed vessels around the Cape of Good Hope. Some South African ports have benefitted from increased demand for restocking and bunkering services, but many have struggled to cope with rising vessel calls, adding to the disruption.
Although diversions around the Horn of Africa have come at extra cost and journey times, only around 15% of global sea trade travels via the Red Sea. Some shipping companies have also added vessels and increased sailing speeds to partly offset the effective loss of global container vessel capacity.
Other indicators point to supply chain disruption being milder than during the pandemic. Measures of supply chain pressures are edging up but are still broadly in line with the historical average. Air and sea freight indicators suggest trade was still holding up well in January. And even though ocean freight rates are still around two to three times higher than the average last November, they have begun to fall for key routes.
If the Red Sea crisis were to intensify, the implications for world goods trade would be more severe. In Oxford Economics Middle East escalation scenario, it is estimate world goods import growth would be 0.5ppts lower in 2024, at 1.9%, relative to our baseline of 2.4%. Higher near-term inflation from a larger hit to global oil supply would also lead to central banks tightening monetary policy, constraining demand.
74 RUSSIA Country Report April 2024 www.intellinews.com