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Yemen has long been one of the poorest countries in the Middle East and North Africa (MENA) and is facing one of the world’s worst humanitarian crises. The conflict that started in 2014 has inflicted massive economic and social costs on the country and its people. From 2015 to 2022, the country experienced a staggering 52 percent contraction in real GDP per capita, currently leaving two-thirds of the population, around 21.6 million individuals, in need of humanitarian assistance.

Moreover, the ongoing conflict has intensified the fragmentation of the country into two distinct economic zones, each governed by its unique set of institutions and policies, with increasing disparity between them. During 2022, a UN-brokered truce brought a glimmer of hope. Although it expired in October 2022, an informal truce remained in place. However, the situation worsened in 2023 due to a Houthi-imposed blockade on oil exports. This blockade is severely impacting foreign currency liquidity and exacerbating existing economic difficulties, including the fiscal position of the Internationally Recognized Government. The exchange rate depreciated to historic lows on Aden’s market, leading to price increases despite a global decline in commodity prices. Moreover, reliance on remittances and aid flows, coupled with climate change vulnerability, leaves Yemen exposed to external factors.

In the face of escalating poverty and heightened food insecurity, many households have depleted traditional safety nets and are now resorting to dire measures. Since the onset of the conflict, the steep rise in the prices of essential goods, particularly food items, has pushed food insecurity to the forefront of concerns in Yemen. Presently, over 17 million people face food insecurity, with 3.5 million experiencing severe malnutrition. Simultaneously, approximately 18 million Yemenis lack access to safe drinking water and dependable sanitation facilities. Consequently, Yemen grapples with recurrent outbreaks of preventable diseases like cholera, diphtheria, measles, and dengue fever. A 2023 mobile phone survey highlighted that, with limited viable options to weather adverse shocks, households are resorting to detrimental coping mechanisms, such as withdrawing children from school (33 percent of the sample) or engaging in precarious, high-risk work (19 percent).

Looking ahead, while Yemen’s prospects remain uncertain due to oil export constraints and ongoing political negotiations, a lasting truce or peace agreement could swiftly strengthen Yemen's economy. Using innovative night-time light (NTL) emission data to assess economic activity during the 2022 truce, the World Bank’s recent Yemen Economic Monitor reveals there was a sharp increase in economic activity during the period. On the longer run, achieving prosperity in Yemen depends on resolving the political disputes that have fractured its economy. An equitable and inclusive peace settlement addressing economic barriers, conflict-related grievances, and structural issues will be critical for Yemen’s recovery and lasting stability.

Last Updated: Jan 25, 2024


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In Depth

  • MENA Economic Update April 2023 (English)
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    MENA Economic Update, April 2023

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Country Office Contacts

Washington, DC
Nicholas Andrew Keyes