The Economics Of The Suez Canal

August 17, 2013 in Daily Bulletin

The turmoil in Egypt continues, yet there’s no danger of the Suez Canal being shut down writes Tim Fernholz:

  • 3% of the world’s oil supply, and 8% of global trade goes through the canal.
  • It is an important source of revenue for Egypt – it contributed $2.4 billion to GDP in the first half of 2013.
  • It provides about 10% of Egypt’s currency reserves – and they’ve fallen to less than $10 billion this year.
  • Therefore the Egyptian government – whether military or Islamist – needs the canal, and ensuring its security is one of the country’s top priorities.

Read more about why it can’t be used as a bargaining chip over here.

Source: Quartz