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Global trade drops 1.3% on Red Sea attacks - IfW Kiel institute

Published 01/11/2024, 04:26 AM
Updated 01/11/2024, 06:25 AM
© Reuters. FILE PHOTO: A cargo ship boat model is seen in front of "Red Sea" words in this illustration taken January 9, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

BERLIN (Reuters) -Global trade declined by 1.3% from November to December 2023 as militant attacks on merchant vessels in the Red Sea led to a plunge in the volumes of cargo transported in that key region, a German economic institute said on Thursday.

Currently around 200,000 containers are being transported via the Red Sea daily, down from some 500,000 per day in November, the IfW Kiel institute said.

Diversions in response to the attacks have led to journeys between Asian production centres and European consumers taking up to 20 days longer, said Julian Hinz, director of the IfW Kiel's trade policy research centre.

"This is also reflected in the declining trade figures for Germany and the EU, as transported goods are now still at sea and have not already been unloaded in the harbours as planned," Hinz said in a statement.

Shipping giants such as Maersk and Hapag-Lloyd have been sending their vessels on longer, more expensive journeys around South Africa's Cape of Good Hope.

Iranian-backed Houthi militants in Yemen have stepped up attacks on vessels in the Gulf region in recent months to show their support for Palestinian Islamist group Hamas fighting Israel in Gaza.

© Reuters. FILE PHOTO: A cargo ship boat model is seen in front of

By region, the IfW Kiel's trade indicator for December showed exports from and imports to the European union down by 2% and 3.1%, respectively. The United States saw a 1.5% drop in exports and a 1% drop in imports, although the Red Sea trade route is less crucial for that country.

China's trade bucked the trend, with exports up 1.3% and imports up 3.1%. The institute said this was likely down to the upcoming Chinese New Year.

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