Weeks of attacks by Iranian-backed Houthi militants on vessels in the Red Sea have disrupted shipping in the Suez Canal, the fastest sea route between Asia and Europe carrying 12% of global container traffic.
For the European economy, already skirting a mild recession as it tries to shake off high inflation, prolonged disruption would be a new risk to its outlook and could derail plans by central banks to start cutting interest rates this year.
Here are some factors that policymakers are considering as they assess the situation and its implications.
WHAT HAS BEEN THE IMPACT ON THE EUROPEAN ECONOMY SO FAR?
In macroeconomic terms, small to negligible. While Germany’s Economy Ministry stressed it was monitoring the situation, it said this week that the only noticeable impact on output so far had been a few cases of stretched delivery times.
Bank of England chief Andrew Bailey concurred, telling a parliamentary hearing it “hasn’t actually had the effect that I sort of feared it might”, while acknowledging the uncertainties remained real.
No impact from the attacks has yet turned up in Europe’s main economic indicator