Yemen: Economic Outline
Yemen has been involved in a conflict since early 2015. For many years the poorest country in the Middle East and North Africa (MENA), it is now experiencing the world's worst humanitarian crisis. Additionally, the conflict has deepened the country's division into two separate economic regions, each governed by its own set of institutions, including two central banks with their respective currencies and policies. This situation has led to growing disparities between the regions. The Northern areas, controlled by the Houthis, encompass about 70% of the population. Meanwhile, the Southern areas, under the governance of the Internationally Recognized Government (IRG), control Yemen's oil and gas resources. Between 2015 and 2023, the country witnessed a significant 54% decline in real GDP per capita, leading to widespread poverty among Yemenis, with 17 million individuals grappling with food insecurity. The Houthi blockade on IRG’s oil exports and heightened tensions significantly impacted Yemen’s economy in 2023. Overall, national GDP is estimated to have contracted by 2.0% in real terms in 2023, following a rebound of 1.5% in 2022. However, the decline in dollar GDP per capita was much deeper, as noted above. The macroeconomic outlook for Yemen is clouded by the regional conflict and escalating tensions in the Red Sea. As a result, the resumption of IRG's oil exports in 2024 is now unlikely due to the slowdown in peace negotiations amid the conflict, resulting in a downward revision of growth projections. Additionally, maritime traffic along the Red Sea route has decreased by 30% since mid-December, disrupting broader trade flows. The World Bank forecasts a contraction of 1.0% in real GDP in 2024.
The fiscal situation of the Internationally Recognized Government (IRG) has worsened. As reported by the Ministry of Finance in Aden, the IRG's fiscal revenues experienced a decline of over 30% in 2023, primarily in oil and customs revenues. To alleviate some of the financial pressures, Saudi Arabia pledged budgetary support totaling USD 1.2 billion, with an initial disbursement of USD 250 million in August 2023 (followed by a second disbursement in early 2024). This support helped fund public sector wages. However, despite implementing measures such as reducing subsidies and expenditures on goods and services, the IRG's fiscal deficit is estimated to have widened from 2.7% in 2022 to around 4% of GDP in 2023. Despite the currency depreciation in the Aden market and the deeply depressed national economy, consumer prices in Yemen declined on average by 1.5% during 2023, also due to a drop in global commodity prices (data World Bank). Yemen continues to grapple with deep structural challenges. The critical oil sector has endured years of insufficient investments, maintenance issues, and struggles to retain or attract foreign investment. Meanwhile, the non-oil sector faces significant constraints due to physical barriers to domestic trade and logistics, disruptions in essential service delivery, acute shortages of inputs, widespread double taxation, and uncoordinated policies. Moreover, Yemenis remain vulnerable to fluctuations in remittances and aid flows, which serve as a vital lifeline, along with the impacts of climate change on agriculture and water resources.
The country has one of the lowest GDP per capita (PPP) in the world, estimated at USD 1,996 in 2023 by the IMF. Yemen has long been one of the poorest in the MENA region and the conflict caused one of the world’s worst humanitarian crises: the UN estimated that 24.1 million people in 2023 were at risk of hunger and disease, and roughly 14 million were in acute need of assistance. Approximately 18 million of its citizens lack access to safe water and sanitation; moreover, an alarming 16.2 million people urgently require emergency aid due to food insecurity and malnutrition, leading to recurring outbreaks of preventable diseases like cholera, diphtheria, measles, and dengue fever (World Bank).
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 23.53 | 18.42 | 16.94 | 17.18 | 19.66 |
| GDP (Constant Prices, Annual % Change) | 1.5 | -2.0 | -1.0 | 1.5 | 7.0 |
| GDP per Capita (USD) | 706 | 541 | 486 | 482 | 540 |
| General Government Gross Debt (in % of GDP) | 65.8 | 81.1 | 81.4 | 75.6 | 67.0 |
| Inflation Rate (%) | 29.5 | -1.2 | 16.9 | 17.3 | 13.7 |
| Current Account (billions USD) | -4.19 | -3.52 | -4.01 | -3.70 | -1.87 |
| Current Account (in % of GDP) | -17.8 | -19.1 | -23.7 | -21.5 | -9.5 |
Source: IMF – World Economic Outlook Database - October 2021.
Note: (e) Estimated Data
| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Yemeni Rial (YER) - Average Annual Exchange Rate For 1 GBP | 290.14 | 276.56 | 286.70 | 616.25 | 950.00 |
Source: World Bank - Latest available data.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 28.1 | 11.7 | 60.2 |
| Value Added (in % of GDP) | 17.2 | 15.2 | 25.0 |
| Value Added (Annual % Change) | 4.1 | -5.2 | -4.9 |
Source: World Bank - Latest available data.
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Labour Force | 6,561,777 | 6,793,468 | 6,956,391 |
Source: International Labour Organization, ILOSTAT database
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| Total activity rate | 38.97% | 39.19% | 39.39% |
| Men activity rate | 71.41% | 71.84% | 72.21% |
| Women activity rate | 6.26% | 6.27% | 6.29% |
Source: International Labour Organization, ILOSTAT database
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
See the country risk analysis provided by Coface.
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
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Latest Update: May 2024
