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Overview

Yemen has long been the poorest country in the Middle East and North Africa (MENA) and is now in the midst of one of the world’s worst humanitarian crises. Embroiled in conflict since early 2015, fighting has devastated its economy, leading to severe food insecurity and destroying critical infrastructure. The UN estimated that 24.1 million people in 2021 were "at risk" of hunger and disease, and roughly 14 million were in acute need of assistance. 

In 2021, the value of the Yemeni riyal continued to depreciate to historic lows, driving large increases in food prices and pushing more people into extreme poverty. Socio‑economic conditions have deteriorated rapidly, affected by declining remittances, trade disruptions, severe fuel supply shortages and reduced humanitarian operations. Growing violence and fragmented macroeconomic policies have added additional strain to fragile economic conditions. An unprecedented humanitarian crisis persists, aggravated by COVID‑19, leaving many Yemenis dependent on relief and remittances.

Distortions created by fragmented institutional capacity and diverging policy decisions across control areas have compounded a crisis created by protracted conflict, the interruption of essential services and rising fuel and food prices have had a devastating impact on Yemen's population.

Around 18 million Yemenis are without safe water and sanitation. A staggering 16.2 million people require urgent emergency assistance because of food insecurity and malnutrition. As a result, Yemen has been grappling with mass outbreaks of preventable diseases, such as cholera, diphtheria, measles and Dengue Fever. Waves of currency depreciations in 2018 and 2019 have created lasting inflationary pressure on the Yemeni riyal that has exacerbated the humanitarian crisis. The disruption of infrastructure and financial services has severely affected private sector activity. The more than 40% of Yemeni households that find it difficult to buy even the minimum amount of food may have also lost their primary source of income. Poverty is worsening even before the crisis, almost half of Yemen's total population of about 29 million. Now it affects an estimated 71% to 78% of Yemenis, with women the most vulnerable.

Economic prospects in 2022 and beyond depend on rapid improvements in the political and security situation and ultimately on whether a cessation of hostilities and political reconciliation will allow for rebuilding Yemen's economy and social fabric. Days after the UN announced a two‑month truce at the beginning of Ramadan in April 2022, Yemen's President Abdrabbuh Mansur Hadi transferred authority to a "Presidential Leadership Council" (PLC) following talks sponsored by the Gulf Cooperation Council in Riyadh. The Kingdom of Saudi Arabia and the United Arab Emirates announced an economic package worth US$3 billion and US$300 million in humanitarian support. The economic package can help cover the deficit of the external account, stabilize the exchange rate and ease upward pressure on prices. While one‑off windfalls are predicted to have sizeable positive effects on the economy, they will not eliminate the need for structural reforms to strengthen the long‑term resilience of Yemen's macroeconomic framework.

Last Updated: Jun 14, 2022

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tons of local seed varieties were produced by farmers as a result of the Rainfed Agriculture and Livestock Project in Yemen

LENDING

Yemen: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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In Depth

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Additional Resources

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