Download Yemen report:English
An unprecedented protracted humanitarian crisis, aggravated by COVID-19, leaves many Yemenis mostly dependent on relief and remittances. Socio-economic conditions are deteriorating rapidly, driven by a currency depreciation, trade disruptions, rising food prices, severe fuel supply shortages, disruption and downsizing of humanitarian operations. Intensifying violence and fragmentation of macroeconomic policies add further strains on the fragile economic conditions, and the population is at risk of famine in 2021.
The economy contracted sharply from an already low base. The oil sector — the only large export earner — was hard-hit by low global oil prices. Non-oil economic activity suffered significantly from COVID-19-related trade slowdown and exceptionally heavy rainfalls, which caused intense flooding, damage and loss of life. Foreign exchange shortages deepened further with the near depletion of Saudi Arabia''s basic import finance facility, reduced oil revenues, and downsizing of humanitarian assistance.
Inflation has accelerated quickly in 2020. The weakening of the rial played a major role; other factors such as COVID-19 related disruptions, insecurity, trade restrictions and associated fuel shortages have also influenced price dynamics. The national average cost of the Minimum/Survivable Food Basket increased by 4% in December 2020 (m-o-m) and by 30% (yoy).
Economic and social prospects in 2021 and beyond are highly uncertain. A gradual recovery of global oil prices with increasing national production and export capacity, would help ease the strain on public finances in the government-controlled areas; means to support the government in payment of civil salaries would also reduce the recourse to central bank financing. Urgent progress to implement past agreements concerning access to supplies and fuel imports through Hodeidah would improve prices and access to food, the provision of public services and the operational environment for humanitarian operations.
After years of conflict, millions of people in Yemen are suffering from the compounded effects of armed violence, ongoing economic crisis and disrupted public services. Yemen faces the sixth largest internal displacement crisis in the world, with over 4.5 million1 people internally displaced since 2015. Although key truce provisions have remained in place even after the truce expired last October, the humanitarian situation remains dire.
In 2023, an estimated 21.6 million people--two thirds of the population--will need humanitarian assistance and protection services.
Humanitarian partners are seeking $4.3 billion to assist 17.3 million of the most vulnerable.
THE HIGH COST OF INACTION
When funding requirements are not met, life-saving humanitarian programmes and services face delays, scale-backs and suspensions--pushing vulnerable people into even more difficult circumstances. By comparison, a well-funded multi-sectoral response in 2023 will help to prevent 17.3 million people from suffering from high levels of humanitarian need.This includes building on the gains made in 2022 to target high levels of food insecurity, particularly for the 6 million people who are currently facing emergency hunger levels.
Washington, October 31, 2024— Yemen''s economy continues to confront deepening challenges as prolonged conflict, political fragmentation, and escalating regional tensions drive the country into an even more severe humanitarian and economic crisis, according to the World Bank''s latest Yemen Economic Monitor (YEM). The Fall 2024 edition, "Confronting Escalating Challenges", reveals that Yemen''s GDP is projected to contract by 1 percent in 2024, following a 2 percent decline in 2023, exacerbating the 54 percent drop in real GDP per capita since 2015. The conflict has pushed most Yemenis into poverty, while food insecurity has reached historic levels, with over 60 percent of the population now facing inadequate access to food.
The report underscores the significant economic hardships caused by the continued Houthi blockade on oil exports, which contributed to a 42 percent drop in fiscal revenues for the Internationally Recognized Government (IRG) in the first half of 2024, preventing it from providing essential services to the population. The suspension of IRG oil exports, combined with a heavy reliance on imports, has intensified external pressures, leading to a depreciation of the Yemeni Rial in the Aden market from 1,619 per US dollar in January 2024 to 1,917 by the end of August.
Since 2023, living conditions have deteriorated drastically for the majority of the population. In July 2024, World Bank phone surveys indicated that severe food deprivation more than doubled in some governorates. Economic fragmentation between Houthi- and IRG-controlled areas continues to worsen, with disparities in inflation and exchange rates undermining both stability and future recovery efforts. Simultaneously, regional tensions, especially in the Red Sea, have led to a more than 60 percent reduction in traffic through the strategic Bab El-Mandeb Strait and the Suez Canal. However, these disruptions have not yet resulted in significant increases in consumer prices.
"Yemen''s economic and humanitarian challenges are growing more acute, yet the opportunity remains to reverse this downward trend with the right support," said Dina N. Abu-Ghaida, World Bank Country Manager for Yemen. "Immediate action is required, including addressing fiscal and external imbalances, mitigating food insecurity, and fostering greater stability. We remain committed to working closely with partners to support Yemen''s recovery and pave the way for a sustainable future."
The YEM further details the potential risks to Yemen''s banking sector, which faced mounting tensions between the Houthis and IRG over regulatory control in the first half of the year. While regional and international mediation efforts have helped ease some tensions, the situation remains fragile, and the report recommends strengthening institutional resilience to manage inflation and fiscal challenges. The report also suggests improving trade routes and access to financial services to ease economic pressures and prevent further fragmentation.
Yemen''s economic outlook for 2025 remains bleak, with the continuation of regional conflict and internal strife threatening to deepen the fragmentation and worsen the social and humanitarian crisis. However, a potential peace dividend could spur rapid economic recovery, should a durable peace agreement be reached. This would pave the way for vital external assistance, reconstruction, and reforms necessary to stabilize the country and its economy.
WASHINGTON, June 26, 2024 — Yemen''s economy continues to face significant hurdles as ongoing conflict and regional tensions exacerbate the nation''s economic and humanitarian crises, according to the World Bank''s latest Yemen Economic Monitor. Yemen''s GDP is projected to contract by 1.0% in 2024, following a 2.0% contraction in 2023 and a modest growth of 1.5% in 2022. Between 2015 and 2023, Yemen experienced a 54% decline in real GDP per capita, leaving the majority of Yemenis in poverty. Food insecurity affects half the population, and youth mortality rates have surged.
The fiscal situation of the Internationally Recognized Government (IRG) deteriorated significantly in 2023. Fiscal revenues declined by over 30%, driven by a substantial drop in oil revenues and diminished customs revenues due to the redirection of imports from Aden to Houthi-controlled ports. In response, the IRG implemented severe expenditure cuts, impacting essential public services and long-term economic growth.
The current account deficit widened to 19.3% of GDP in 2023, up from 17.8% in 2022. The blockade on oil exports significantly impacted the trade deficit, while foreign reserves remained relatively stable due to financial support from partners, including the conversion of IMF Special Drawing Rights (SDRs).
The resumption of monetary financing by the IRG heightened inflationary pressures. However, inflation rates varied across regions, with Sana''a experiencing deflation at -11.8% and Aden facing elevated inflation at 7.0% due to currency depreciation. Additionally, the cost of essential goods has surged in Aden, with many families now spending over 60% of their income on food alone.
"Yemen''s economic and humanitarian challenges are intensifying, yet the potential for recovery remains with the right support and strategies," said Dina N. Abu-Ghaida, World Bank Country Manager for Yemen. "The report underscores critical areas for action, including tackling fiscal pressures, alleviating trade disruptions, and stabilizing the currency. The World Bank is steadfast in its commitment to supporting Yemenis through these crises, delivering immediate assistance, and paving the way for a sustainable and resilient future."
Additionally, the report notes that continued fiscal pressures and economic fragmentation between northern and southern areas threaten to deepen the divide and further complicate recovery efforts. For example, the redirection of imports has led to a substantial decrease in customs revenues for Aden, further straining the economic conditions in the south compared to the north. The potential for increased aid and investment hinges on achieving a lasting truce and commitment to reconstruction from all parties involved.
The report also highlights the severe impact of escalating regional tensions, particularly Houthi attacks in the Red Sea, which have disrupted international shipping and trade. This has led to increased shipping costs and insurance premiums, further straining Yemen''s economy.
The economic outlook for Yemen remains highly uncertain. The resumption of oil exports and broader economic recovery appear remote without a lasting peace agreement. Ongoing regional conflicts, currency depreciation, and fiscal pressures pose significant risks. However, the report points out that a sustainable peace agreement could rapidly improve Yemen''s economic prospects, supported by external financial assistance and reconstruction efforts.
ReliefWeb''s Terms & Conditions.
© 2024 all rights reserved.
The cost of the prolonged conflict in Yemen is paid by most Yemenis. The extreme poverty, steep economic decline, displacements, and lack of basic medical services abound in a country deemed as one of the world''s worst humanitarian crises. But the biggest price Yemenis pay is the widespread planting of mines across the country which will continue to impact the 31.8 million Yemenis for years to come.
About Yemen cost savings
As the photovoltaic (PV) industry continues to evolve, advancements in Yemen cost savings have become critical to optimizing the utilization of renewable energy sources. From innovative battery technologies to intelligent energy management systems, these solutions are transforming the way we store and distribute solar-generated electricity.
When you're looking for the latest and most efficient Yemen cost savings for your PV project, our website offers a comprehensive selection of cutting-edge products designed to meet your specific requirements. Whether you're a renewable energy developer, utility company, or commercial enterprise looking to reduce your carbon footprint, we have the solutions to help you harness the full potential of solar energy.
By interacting with our online customer service, you'll gain a deep understanding of the various Yemen cost savings featured in our extensive catalog, such as high-efficiency storage batteries and intelligent energy management systems, and how they work together to provide a stable and reliable power supply for your PV projects.
Related Contents
