Tourism in Egypt was negatively affected by Israel's war on the Gaza Strip (Al Jazeera)

The economic repercussions of Israel's war on the Gaza Strip are still largely under control in areas far from military operations, but the situation is different in the countries surrounding Israel.

Its economy was greatly damaged, according to a report published by the American New York Times.

According to the newspaper, Houthi attacks on commercial ships continue to disrupt a vital trade route and increase shipping costs, while the threat escalates every day around the hotbeds of tension in Lebanon, Iraq, Syria, Yemen, Iran and Pakistan.

under control

Despite the “shocking” death toll and “painful” misery resulting from violence in the Middle East, the broader economic impact has so far been under control.

Oil production and prices - a critical driver of economic activity and inflation around the world - have returned to pre-crisis levels, and international tourists are still traveling to other countries in the Middle East, but for Israel's neighbors Egypt, Lebanon and Jordan, the economic damage is severe. actually.

According to an assessment conducted by the United Nations Development Programme, the war between Israel and Gaza cost the three countries in just 3 months $10.3 billion, or 2.3% of their combined gross domestic product, and it is expected that an additional 230,000 people in these countries will fall into poverty.

The assessment warned that human development may lose between two to three years of progress, at least in Egypt, Jordan, and Lebanon, pointing to refugee flows, high public debt, and a decline in trade and tourism, which are a vital source of revenues, foreign currency, and job opportunities.

According to the newspaper, the conclusion reflects an update issued by the International Monetary Fund last month, in which it said that it would lower its expectations for the growth of the economies of the countries most at risk when it publishes its forecasts for the global economy at the end of this month.

It quoted the director of the Center for Middle Eastern Studies at the University of Oklahoma, Joshua Landis, as saying that the recent economic strikes came at the worst time for these countries, as economic activity in the countries of the Middle East and North Africa was already in decline, and growth fell to 2% last year from 5.6%. % in the previous year.

Lebanon was in a state that the World Bank described as “one of the worst economic and financial crises in the world in more than a century and a half,” and Egypt was on the verge of financial hardship.

The Israeli occupation has killed 25,295 Palestinians and injured 63,000 since October 7, according to the Ministry of Health in Gaza, and the Strip has been subjected to widespread devastation and devastation.

Tourism was affected in the countries surrounding the war on the Gaza Strip, especially Jordan (Al Jazeera)

Erosion of trust

According to the newspaper, uncertainty about the course of the war is eroding consumer and business confidence in Jordan, Lebanon and Egypt, which could lead to a decline in spending and investment, International Monetary Fund analysts wrote.

Egypt - the largest country in the Arab world in terms of population - has not recovered from the impact of the high cost of basic imports such as wheat and fuel, the decline in tourism revenues, and the decline in foreign investment resulting from the Covid-19 pandemic and the war in Ukraine, according to the newspaper.

The newspaper says that the government's "excessive" spending on "show" projects and weapons;

It led to a rise in Egypt's debt, and when central banks around the world increased interest rates to reduce inflation, debt payments increased significantly, while rising prices inside Egypt continue to erode the purchasing power of households and companies' expansion plans.

“No one wants to invest, but Egypt is too big to fail,” Landis says. “It is unlikely that the United States and the International Monetary Fund will allow the country to default on its $165 billion in foreign loans, given its strategic and political importance,” according to what the New York Times quoted him as saying.

Shipping movement

The decline in transit shipping traffic to the Red Sea from the Suez Canal is the latest economic blow to the Egyptian economy. Between January and August, Egypt achieved an average revenue of $862 million per month from the canal, through which 11% of global maritime trade passes. According to the newspaper.

According to the head of the Suez Canal Authority, traffic fell by 30% this month compared to December, and revenues fell by 40% compared to 2023 levels, while the newspaper quoted James Swanston, emerging markets economist at Capital Economics, as saying: “This is The biggest indirect effect.

A picture of the Israeli ship that was seized by the Houthis last November (Al Jazeera)

tourism

For these three struggling economies, the decline in tourism is particularly worrying, according to the newspaper. In 2019, tourism in Egypt, Lebanon, and Jordan represented between 35% and nearly 50% of their exports of goods and services combined, according to the International Monetary Fund.

Now in Jordan, flight reservations have decreased by 18%.

In Lebanon, where Hezbollah is striking Israeli forces along the border, bookings have fallen by 25%.

The newspaper quoted Olivier Ponte, Vice President of Insights at ForwardKeys, as saying: “Fears of further regional escalation cast a shadow over travel prospects in the region.”

In Lebanon, travel and tourism previously contributed one-fifth of the country's annual GDP.

The general manager of the Lebanon Tourism and Travel Company in Beirut, Hussein Abdullah, said: “The number one tourist site in Lebanon is Baalbek...it is completely empty.”

He added that since October 7, his bookings have declined by 90% compared to last year, and he continued: “If the situation continues like this, many tour operators in Beirut will stop working.”

The newspaper quoted Khaled Ibrahim, a consultant for Amisol Travel Egypt and a member of the Middle East Travel Alliance, as saying that cancellations began to flow in after the attacks began.

Like other tour operators, discounts were offered on popular destinations such as Sharm El-Sheikh at the southern tip of the Sinai Peninsula, and occupancy rates reached around 80% of normal.

Source: American press