Egypt Anticipates Economic Boost with Opening of New Suez Canal

Egypt’s New Suez Canal opens on August 6, 2015. The original Suez Canal has been a huge source of income to the nation over the years, and in a time of sagging economic performance, the opening of a new canal may be a crucial boost.

Egypt’s New Suez Canal opens on August 6, 2015. The original Suez Canal has been a huge source of income to the nation over the years, and in a time of sagging economic performance, the opening of a new canal may be a crucial boost.

According to a report by Reuters, President Abdel Fattah al-Sisi sees the opening of this new canal section as a potent symbol of national pride and a chance to reduce the nation’s double-digit unemployment rate. Digging and dredging work should conclude on July 15, and should open for use on August 6.

Work began on the new section of the Suez Canal 10 months ago and has cost the nation about US$8 billion to complete. The new canal section runs alongside the existing, 145-year-old canal, and the two connect by four small channels. The existing section has also been part of a larger undertaking to expand shipping through the canal, which greatly expedites overseas transit between Europe and Asia. Egypt also plans to build an international industrial and logistics hub near the new canal section which it believes may contribute as much as a 1/3 increase to the economy, amounting to about $100 billion in new revenues per year. Egyptian authorities have also been working on the passage of a law designed to ease red tape for foreign investors in the new Suez industrial hub.

Throughout its history, the Suez Canal has served as a critical source of income to Egypt. Unfortunately, traffic through the canal dropped steeply after the 2011 uprising, and the economy as a whole suffered from a loss of tourism and foreign investment. While shipping has returned to almost normal levels, the Egyptian government remains optimistic that the new canal section and the added shipping traffic should help boost the economy to pre-uprising levels and restore foreign confidence.

The new canal section should cut time to navigate the Suez from about 22 hours to around 11. This would make it the fastest such waterway in the world. To date, about 219.3 million cubic meters of sand have been removed from the canal, representing approximately 85 percent completion. Egyptian authorities also advise that the canal has been fully secured, thus shippers and others using the canal should feel no concern about attack or terrorism.

The existing canal has routinely earned Egypt approximately US$5 billion per year. The new canal, which will allow two-way traffic of larger ships, should triple revenues by 2023.