Risk of EU prices rising, growth slowing from Red Sea attacks -EU trade chief
BRUSSELS (Reuters) — The European Union faces a risk of consumer prices surging and growth slowing due to disruptions to shipping through the Red Sea, though it has yet to feel an economic impact, a top EU official said on Tuesday.
European Commission Vice President Valdis Dombrovskis, who oversees the 27-nation bloc's economy, said shipping traffic through the Red Sea had decreased by 22% in one month in the face of attacks by Yemen's Iran-aligned Houthis.
However, the decline will accelerate as shipping companies are re-routing vessels around the Africa continent, he said, adding that the Commission was monitoring the situation very closely.
«So far there has not been visible impact on energy prices and more generally impact on goods prices. But we already see impact on transport prices, which have increased,» Dombrovskis told reporters after a meeting of EU trade ministers that addressed the issue. «Certainly, it's a risk factor».
«The broader economic impact on consumer prices and the EU economy in general will depend very much on the length of this crisis,» he said. «Hence, swift action is necessary.»
In the latest international response to Houthi attacks, U.S. and British forces carried out air strikes on Monday at eight different locations in Yemen, targeting a Houthi underground storage site as well as missile and surveillance capabilities.
Dombrovskis said the international community was acting, and that the European Commission would update its economic forecasts in February when it might need to factor in Red Sea disruptions.
The Suez Canal, at the north end of the Red Sea, carries 12-15% of global goods trade and 25-30% of shipping containers. For the EU, 23% of all goods imports came by ship from Asia in
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