Yemen Monitor/Aden/Special:
A recent report indicates that there is bad news for the global economy if “Western powers fail to prevent Iranian-backed Houthis from threatening commercial shipping in the Red Sea.”
Under a pessimistic scenario, global GDP would decline by 0.4% this year, according to a research paper published by the Institute of International Finance in Washington, D.C.
The paper, which was cited by Forbes magazine, warns that “it is essential for the West to defeat or contain the Houthi rebels who are attacking ships heading for the Suez Canal.”
It added: “The attacks on merchant ships in the Red Sea are particularly worrying for the global economy.”
The report states that the repeated attacks by the Houthis have led to a reduction in crossings through the Suez Canal and increased global transportation costs.
The report makes it clear that this is the current situation, but it could become much worse if the efforts of the US Navy and the British Royal Navy fail to subdue or contain the Houthi missile attacks.
It adds: This is important because 30% of the world’s oil passes through this area. If it is disrupted due to this very pessimistic scenario, everyone – whether they are oil importers or not – will suffer from rising inflation, which is mainly driven by rising energy costs.
The report states: “While it is difficult to predict the magnitude and duration of the rise in energy prices, we assume that oil and natural gas prices will rise by 40% in 2024.”
It adds: “Moreover, we expect global trade volume growth to slow to 0.8% (compared to 1.6% in the baseline scenario) due to the continued attacks on merchant ships, which could also lead to further inflation.”
Since November, the Houthis have targeted more than 60 merchant ships in the Red Sea and the Gulf of Aden, and recently expanded their operations to the Indian Ocean. They said they were targeting ships linked to Israel, which is waging a brutal attack on Gaza Strip. However, the Yemeni government and experts say the Houthis’ goals are domestic to escape internal crises and improve their image in the region.
In response, the United States and Britain have been carrying out a campaign of airstrikes against the Iranian-backed Houthi militants since January 11. As a result, the Houthis have announced the expansion of their operations to include US and British ships.
