Yemen Economic Monitor

Yemen Economic Monitor: Confronting Escalating Challenges

Overview

The Yemen Economic Monitor provides an update on key economic developments and policies over the past six months, highlighting their broader implications for Yemen's outlook. The report covers a range of topics, from macroeconomic conditions to financial markets and human welfare.

Key Findings

Economic and Social Context

• Conflict Impact: The conflict has led to a sharp decline in economic activity and human capital.
• Youth Mortality: There has been a dramatic rise in youth mortality rates due to the conflict.

Recent Economic Developments

• Real Sector: The real sector has faced significant challenges, with declining fiscal revenues and increased imports despite Red Sea escalations.
• Fiscal Developments: The Internationally Recognized Government (IRG) has seen a decrease in fiscal revenues and an increase in fiscal expenditures.
• External Sector: Imports have increased, but remittances have remained resilient.
• Monetary Policy and Inflation: Inflation rates have eased sharply, and exchange rates continue to diverge.
• Financial Sector: Money in circulation (M0) and foreign reserves have continued to fall.

Selected Economic Indicators (2019-2023)

• GDP per Capita: Expected to continue decreasing.
• Oil Production: Expected to stagnate.

Outlook and Risks

Outlook

• GDP per Capita: Expected to continue declining.
• Oil Production: Expected to remain stagnant.

Risks

• Escalating Conflicts: Continued violence and unrest pose significant risks to economic stability.
• External Shocks: Fluctuations in international markets could impact Yemen's external sector.

Key Charts and Figures

1. Figure 1.1: The conflict led to a sharp decline in economic activity.
2. Figure 1.2: Youth mortality rose dramatically with the conflict.
3. Figure 1.3: Human capital declined significantly.
4. Figure 1.4: Fatalities remained low during 2023 and 2024.
5. Figure 1.5: Rising protests and riots indicated growing unrest.
6. Figure 1.6: Houthi attacks in the Red Sea escalated.
7. Figure 1.7: Traffic through the Suez Canal collapsed.
8. Figure 1.8: IRG fiscal revenues excluding grants declined.
9. Figure 1.9: IRG fiscal expenditures increased.
10. Figure 1.10: Imports increased despite Red Sea escalations.
11. Figure 1.11: The shift towards Houthi ports stabilized.
12. Figure 1.12: Remittance inflows remained resilient.
13. Figure 1.13: Foreign reserves continued to fall.
14. Figure 1.14: IRG slowed fiscal monetization.
15. Figure 1.15: Money in circulation (M0) (trillions of LCU).
16. Figure 1.16: Inflation rates eased sharply.
17. Figure 1.17: Exchange rates continued to diverge.
18. Figure 2.1: GDP per capita is expected to continue decreasing.
19. Figure 2.2: Oil production is expected to stagnate.

Conclusion

The Yemen Economic Monitor highlights the ongoing challenges facing Yemen's economy, emphasizing the need for sustained efforts to address the conflict and improve economic stability. Key areas of focus include fiscal management, external sector performance, and human development indicators.