Sudan Conflict Deals New Blow to Stagnant Economy

Sudanese residents shop in a bazaar in Khartoum, Sudan, May 4, 2019. REUTERS/Umit Bektas/File Photo
Sudanese residents shop in a bazaar in Khartoum, Sudan, May 4, 2019. REUTERS/Umit Bektas/File Photo
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Sudan Conflict Deals New Blow to Stagnant Economy

Sudanese residents shop in a bazaar in Khartoum, Sudan, May 4, 2019. REUTERS/Umit Bektas/File Photo
Sudanese residents shop in a bazaar in Khartoum, Sudan, May 4, 2019. REUTERS/Umit Bektas/File Photo

The conflict shaking Sudan has dealt a crippling blow to the heart of the country's economy in the capital Khartoum, as well as disrupting internal trade routes, threatening imports and triggering a cash crunch.

Across swathes of the capital factories, banks, shops and markets have been looted or damaged, power and water supplies have been failing, and residents have reported steep price rises and shortages of basic goods.

Even before the fighting between military factions broke out on April 15 Sudan's economy had been in deep stagnation following a crisis stretching back to the last years of Omar al-Bashir's rule and turmoil after his overthrow in 2019, Reuters said.

Tens of thousands have now fled the violence in Khartoum and its sister cities of Bahri and Omdurman, while millions more have sheltered at home as shelling and air strikes rattle across neighborhoods.

Transport of goods and people has slowed as troops and sometimes gangs roam the streets. Telecom networks have become unreliable and some say they have begun rationing food and water.

"We are afraid, and we are suffering from high prices, shortages, and lack of salaries. This is a war on the citizen," said Ismail Elhassan, an employee at one Khartoum business.

Sudan, already an important exporter of gum arabic, sesame, peanuts, and livestock, has the potential to be a major agricultural and livestock exporter and logistics hub.

But the economy has been held back by decades of sanctions and international isolation, as well as deep corruption. Most Sudanese have struggled with years of rampant inflation, sharp currency devaluations and sliding living standards. About a third of the 46 million population depends on humanitarian aid.

NO DRIVERS

The conflict has hampered trade flows in and out of the East African nation, since banking and customs procedures are centralized in Khartoum. While the country's main port on the Red Sea is operating, at least one big shipping company, Maersk, says it has stopped taking bookings until further notice.

Imports of wheat, key to Sudan's food security, are becoming more difficult, said one Khartoum-based trader. Imports of white goods such as refrigerators across the land border with Egypt, where tens of thousands of Sudanese have fled northwards, have also slowed, said Federation of Egyptian Chambers of Commerce secretary-general Alaa Ezz.

Michel Sidhom, a supply chain manager at a trading company operating in Egypt and Sudan, said its business in Sudan had "completely stopped" as exports of Egyptian fertilizers and flour, typically about 10,000 tons per month each, were halted.

Egypt, Sudan's second biggest destination for livestock, a key export, said it is looking to diversify its sources as a result of the unrest.

Sidhom says his company's traders in Sudan have left Khartoum, and no drivers are willing to risk transporting their goods to the capital city.

"They shut down and left Khartoum until further notice. Whoever stays in Khartoum stays in a battlefield," he said.

SCARCITY, HIGH PRICES

Shortages of items such as flour and vegetables have been reported in Khartoum along with price hikes. Long queues form in front of bakeries and supermarkets in the capital.

The price of one kilogram of lamb has jumped nearly 30% to 4,500 pounds ($7.52), according to a Reuters reporter, while the price of a kilogram of tomatoes doubled to 1,000 pounds ($1.67).

A supermarket owner in Omdurman blamed the inflation on soaring black market fuel prices. A gallon of scarce fuel can now cost as much as 40,000 pounds ($67), up from 2,000 pounds ($3.34).

Even in places where fighting has abated demand is low, said one Omdurman butcher. "Everyone's left," he said.

Sudan's pound has lost about 600% against the dollar since 2018, prompting many to save money in dollars.

Traders in Khartoum face a cash crunch, and people are increasingly dependent on an electronic wallet app known as Bankak, which often suffers outages, to pay bills.

The black market has become distorted, as relatives abroad seek to sell dollars for Bankak transfers, while those in the country seek dollars for safe keeping.

Currency traders offer dollars at rates as high as 700 pounds ($1.17), while buying at as little as 300 pounds ($0.5014), with prices varying widely as transport and communication becomes more difficult.

Sudan's central bank on Sunday said banks outside the capital were carrying out withdrawal and deposit transactions. Within Khartoum, the army and RSF have accused each other of looting banks. The head of one Khartoum bank said he was trying to temporarily move the bank's headquarters outside the capital.

Another executive said that in years of economic reforms, coups, and protests, "this is the biggest challenge to face the banking system, and threatens an almost complete shutdown," he said.

In the city of Atbara, north-east of Khartoum, crowds of people were seen outside of banks, some of which had imposed withdrawal limits.

"My cash has run out because I haven't received my salary and the banking apps don't work," said Elhassan, speaking from Khartoum.



Tesla, Chips, and Banks Tumble as China’s Retaliation Stokes Fears of Widening Trade War

Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
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Tesla, Chips, and Banks Tumble as China’s Retaliation Stokes Fears of Widening Trade War

Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)

US chip companies, banks and oil majors fell sharply on Friday after China retaliated to Trump's tariffs with steep duties, in an intensifying trade war between the world's two largest economies that cast a shadow on global growth.

China slapped additional duties of 34% on US goods, set to go into effect April 10. It also announced curbs on exports of some rare-earths and added several US firms to its export control list and the "unreliable entities" list, which allows Beijing to take punitive action.

The action followed US President Donald Trump's 34% duties on imports from China announced on Wednesday, which triggered a massive market meltdown on Thursday. The latest levies were on top of the 20% tariffs on China imposed earlier this year.

Investors were already fretting over potential supply chain disruptions, price hikes and demand destruction for everything from cars and smartphones to sneakers.

Shares of Tesla and Apple - among consumer tech companies with a large exposure to China - were down 8% and 4%, respectively. While both companies have local production in China, duties on US-imported parts could squeeze margins and force price hikes.

"Several tech companies have established local supply chains in China. Most source components from China already, and hence, disruptions should be controllable, though we do expect price hikes on parts and components not being sourced from China," said Nishant Udupa, practice director at research firm Everest Group.

For Tesla, already in a bruising price war with local Chinese rivals, raising prices would pressure demand further.

"Apple's smartphone sales had already been declining in China for some time, faced with growing, cheaper competition. So, the prospect of steep import duties being imposed is likely to sharply erode sales even further," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Shares of Alphabet, Microsoft and Amazon.com were subdued as they had limited exposure to China.

GE Healthcare's stock slid nearly 13%, following China's export controls on a rare-earth metal that is used in MRI scans. The country's announcement of an anti-dumping investigation into imports of certain medical CT tubes from the US and India added to the worries.

SEMICONDUCTORS

Chip companies are set to face headwinds, too, although US exports a much smaller amount of electronic equipment to China. Shares of Intel, Applied Materials and Qualcomm, all of which count on China for at least 30% of revenue, were down 5% to 8%.

The US exported more than $15 billion worth of electrical and electronic equipment to China in 2024, with most of the value coming from integrated circuits, transistors and other semiconductor devices, according to economic data provider Trading Economics. In comparison, the U.S. imported more than $127 billion in electronic equipment from China last year.

"Semiconductors will feel a greater impact ... We're already witnessing a domestic ecosystem evolve in China, with direct alternatives for every major US semiconductor firm. This trend is likely to accelerate," Udupa said.

NATURAL RESOURCES

Crude prices, already under pressure from an expected OPEC+ oil output hike in May, added to the losses.

Oil majors Exxon and Chevron fell more than 5%. Top oilfield service company SLB dropped 10%, and the biggest US refiner by volume, Marathon Petroleum, fell 6%. Chemicals company DuPont slid 12%.

"The trade war escalated, recession fears rise and consequently oil demand growth is to take a sizeable hit," said Tamas Varga, analyst at PVM.

China is also the largest market for US agricultural products, even as imports of US farm goods dropped last year.

Shares of top grain traders like Archer-Daniels-Midland fell 8% while Bunge was down 6%. Fertilizer firms Mosaic and CF Industries fell 10% and 8%, respectively.

China's tariffs on US soybean exports would increase the cost to local customers, especially animal feed producers, and could prompt the country to source more from Brazil and Argentina, said Morningstar analyst Seth Goldstein.

BANKS

Banks' shares extended their declines from Thursday. The industry has been clouded by fears that a trade dispute could temper consumer confidence, reduce spending, weaken loan demand and pressure fees from advising on deals.

JPMorgan Chase, the biggest US bank by assets, sank 7%. Wall Street titans Goldman Sachs and Morgan Stanley dropped more than 7% each.

MACHINERY

Heavy machinery makers Caterpillar and Deere fell 5% and 4%, respectively, on concerns over demand from one of their largest overseas markets.

China is a major buyer of construction and agricultural equipment and a key player in global infrastructure spending.

RETAIL

Shares of major luxury and footwear firms reversed coursed after Trump said Vietnam's leader To Lam has offered to reduce tariffs on US imports. Ralph Lauren's shares were up 2.5%, while Tapestry rose as much as 3.6%.

Nike gained 4%, Roger Federer-backed On jumped 7.2% and Lululemon Athletica rose 3%. The stocks had initially fallen after retaliatory tariffs by China, a major revenue contributor.