Egypt has undertaken a $8.2 billion project to upgrade the Suez Canal by deepening the main channel, building a 35 kilometer parallel waterway, as well as an additional 37 kilometers of auxiliary channels.
The intention of the project was to take advantage of an increase in world trade, by increasing the number, size, and speed of ships taking the shorter route between the Mediterranean Sea and the Indian Ocean. According to officials, Egypt’s transit fees would increase from $5 billion a year to more than $13 billion by 2023. This is equivalent to approximately 3 percent of the country's GDP. The development of a special economic zone would add another $55 billion of assets to Egypt’s industrial base by 2030.
In the years to come, world trade is expected to grow and the price of fuel will likely rise, meaning the decision to upgrade the Suez Canal could eventually pay off; but, this may be a long wait. In the meantime, Egypt is facing short-term economic challenges that the project may have contributed to.