War in the Middle East: Warnings of serious economic impacts on Sudan

As the war between the United States and Israel against Iran continues, and in light of Iranian attacks on the Gulf states and other Arab states, concerns are mounting about the potential economic effects on Sudan, which has been suffering from the ongoing war between the armed forces and the Rapid Support Forces (RSF) for nearly three years.

Dr Jibril Ibrahim, Minister of Finance, said that the ongoing war in Iran and the Gulf region may have direct economic repercussions on Sudan, especially in terms of commodity supplies and energy prices.

During his Ramadan iftar address yesterday, he pointed to the possibility of a rise in oil prices globally, and the accompanying increase in import costs, in addition to expectations of a rise in gold prices. He also warned of the impact of any possible disruptions in vital shipping lanes such as the Strait of Hormuz and Bab El Mandeb on the movement of trade and supplies.

He added that regional developments may impose a new economic reality, calling for early preparation to deal with any potential repercussions on the domestic market and supply chains.

Expected effects

In an interview with Radio Dabanga, Economist Dr Haitham Fathy ruled out that regional tensions will be directly reflected in the availability of food commodities in Sudan, pointing out that there are multiple sea and land lines that have proven effective in securing food security during the April 15 war. He stressed that the current strategic stockpile is relatively safe.

At the same time, he predicted that the war in the Middle East would affect shipping and the exchange rate in the local market, and that the Sudanese pound would likely depreciate due to pressure on dollar revenues and free currency reserves.

He said that prolonged tensions could lead to the disruption of Sudanese ports, shortages in supply chains, and the impact of imports. The closure of some airspace and the suspension of air traffic will also directly affect Sudanese exports and increase the cost of transportation.

He stressed that the war will lead to high inflation rates as a result of the increase in the prices of goods and services and restrictions on foreign trade, in addition to the increase in the prices of hydrocarbons and gas at the international level will reflect negatively on Sudan.

He predicted that the budget deficit gap will widen due to rising energy prices in general, noting that gas imports may witness shortages as a result of maritime navigation disruptions.

He ruled out a direct and significant impact on the prices of goods and services in the near term due to the abundance of current stocks in the Sudanese market, but predicted that there would be a direct and noticeable impact on prices and the economy in general if the crisis is prolonged.

Dark tunnel

Economist Dr Mohamed El Nayer, said in an interview with Radio Dabanga that the war in the Middle East could lead to the region and the world entering a “dark tunnel” economically.

He stressed that the war has practically led to the closure of the Strait of Hormuz, which has a significant impact on the global economy, and raises transportation and insurance costs due to the difficulty of passing through it, which is reflected in the prices of goods and services, especially oil and gas.

He pointed out that gas prices in Europe have risen by 50 per cent.

He said that Sudan’s economic resilience depends on the duration of the war, the country’s stockpiles of essential and strategic commodities and fuel, in addition to the ability of the economic team to manage the crisis economy, stressing that production and productivity play a major role in providing goods.

Economist and banking expert Ahmed Ben Omar said that Iran’s attacks on neighbouring countries may affect oil supplies in the region, which poses a challenge to Sudan, noting that the country is heavily dependent on hydrocarbons for its economy.

In an interview with Radio Dabanga, he added that this will affect transportation, the movement of goods and trade inside and outside the country, as well as the agricultural sector in terms of providing the necessary fuel for the agricultural seasons, operational costs, and exploration.

Sudan relies on importing more than 80% of its supplies through Red Sea ports, which increases its sensitivity to regional influences, he said, expecting the costs of these supplies to rise.

Proposed actions

Economist and banking analyst Ahmed Ben Omar stressed the need for the government to take precautions, including consultation with fuel importers, to avoid the effects of the ongoing war in the Middle East.

He pointed out that there are technical problems related to the storage of fuel in the warehouses and the current distribution and pricing systems.

He predicted a “first shock” in supplies, but could be bypassed if supplies continue without threats and attacks stop.

He added that the turbulent situation requires solutions to ensure the stability of the entire region, while stressing the importance of peace and security.

For his part, Dr Mohammed El Nair called for measures to be taken to avoid complicating the scene, a significant rise in prices or a shortage of goods, suggesting the formation of a crisis team to manage the current situation in continuous coordination between the states and the centre.

Dr Haitham Fathy called on the state to protect exports by developing additional mechanisms to counter the effects of the war on Sudanese exports, and to protect the interests of exporters without compromising local stocks.

He also stressed the need to develop a comprehensive plan to study the effects of the war on exports and protect interests, discuss various possible scenarios, and develop the necessary precautionary measures.

He pointed out the importance of providing alternatives to gas by resorting to countries such as Algeria to fill any possible deficit, calling for preparations with flexible plans to face various developments.