We previously reported the impact on stock markets & wheat amid the Russian – Ukrainian war, we will be discussing other pillars impacted by the war including: energy, tourism & the Suez Canal.
Wheat remains an issue
In an interview with Asharq, Egypt’s Minister of Finance said the rise in global wheat prices will increase the cost of the country’s wheat imports by EGP 12-15 billion in the budget for the fiscal year 2021-2022.
According to data from the Central Agency for Public Mobilization & Statistics (CAPMAS), Egypt is the world’s largest importer of wheat, importing approximately 12.9 million tons in 2020 for the government & private sector at a cost of $3.2 billion.
More revenues to Suez Canal
Tensions between Russia & Ukraine are likely to have a positive impact on the Suez Canal. ships that normally sail the Russian Northern Sea Route, could change their route to pass through the Suez Canal because it is the fastest & safest route, which means more revenue.
Tourism takes a hit
Egypt is the most favorable destination to Ukrainins with 1.6 million tourists visiting in 2019, while between 300,000-500,000 Russian tourists have visited each month as of July 2021.
The effects of the war are already being felt, with a reported 25-30% decrease in tourism bookings from Russians & Ukrainians in February.
The war is expected to have a devastating impact on the sector & the government must shift its focus to alternative markets, particularly those in European countries far from Russia & Ukraine.
Energy wrap up
The European Union is the world’s largest importer of natural gas, with Russia accounting for the major share of its supply (41%). While a complete cessation of Russian gas flows is unlikely at the moment, Egypt could seize the opportunity to assist Europe in reducing its reliance on Russia.
Following Russia’s attack on Ukraine, oil prices reached $118 per barrel, Egyptian officials are keeping an eye on the rise in oil prices, as any increase could put pressure on the state budget. Rising oil prices benefit producers, but they raise costs for everyone else, contributing to the global inflationary wave.