The World Bank reported that Somali piracy is having a severe impact on the economic activity of neighboring countries, adding to global trade costs annually. It emphasizes adding billions of dollars. Piracy, he said, has been on the decline since 2011, but it can still cost the global economy an estimated $18 billion annually. The increase in costs is due to changes in shippers’ trade routes, increased insurance premiums, fuel costs and increased security costs for onboard security guards. The threat of piracy is also an economic blow to East African countries, mainly in tourism and fishing. The report suggests that restoring a functioning Somali state is the solution to ending piracy. The report further states that Somali pirates have carried out 1,068 attacks and 218 successful hijacks since 2005, resulting in an estimated average annual ransom payment of US$53 million. Attacks have declined sharply since 2011. This is largely due to increased international naval mobilization and increased security measures by the shipping industry.

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The economic cost of piracy

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