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.



IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.


Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.


Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.