Yemen Economy Facts
Yemen is one of the poorest countries in the Middle East. The country’s most important source of income is oil and to some extent natural gas. The oil industry has previously accounted for two-thirds of government revenue and 90 percent of export revenue, but production has dropped dramatically. Several years of war have had disastrous consequences for the entire economy.
From the mid-1990s, the government of Yemen had financial tightening on the program, which the IMF and the World Bank set as a requirement for its support. But promised cuts and restructuring were delayed or eroded by the Yemenites, as they led to popular dissatisfaction. On several occasions, international aid grants and loan disbursements were cut or suspended due to a slow pace of reform.
- Countryaah.com: Major imports by Yemen, covering a full list of top products imported by the country and trade value for each product category.
Since the Arab Spring of 2011, Yemen’s economy has deteriorated further, mainly in three stages.
Protests and unrest that erupted in 2011 were the first step. That year, GDP shrank by 15 percent, according to the World Bank. At the same time, consumer prices went up about 10 percent a year over the course of a year, and by almost 20 percent only in 2011.
Step two was caused by a race for the oil price. From the summer of 2014 until the beginning of 2015, the world market price was halved. Already in the summer of 2013, before the big price collapse, the Yemeni government had announced that the country had to pay more for imported fuel than it received on its sale of crude oil.
- Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including YEM which represents the country of Yemen. Check findjobdescriptions to learn more about Yemen.
Then the escalated war situation from 2015 caused oil and gas recovery to collapse. According to the cooperative organization IEA, by 2016, oil production had dropped to only one-eighth of what it was before the war and natural gas even more. But the third stage also includes other devastating disruptions to the war, in particular, fighting and air strikes have paralyzed the country’s ability to bring supplies to its people.
It was thanks to the coffee Yemen was once able to open a door to the world market. The name of the city of Mukha was spread throughout the world, to us as “suede”. Coffee cultivation still exists in Yemen’s highlands. Production increased for several years and about half were exported before the war escalated in 2015. Foreign aid agencies supported irrigation projects, and the Yemeni government hoped that the role of coffee for the country’s economy would increase. However, the large world market had long ago been taken over by plantation growers, mainly Latin America. But for the domestic economy, agriculture is important. It usually accounts for a smaller proportion of gross domestic product (GDP) but employs a large proportion of the population. However, the war has knocked out large parts of agriculture, and the transport chains,
In the past, Yemen has been able to export agricultural products on a small scale, essentially without processing: in addition to coffee, including fish and hides. Exports have been mainly to Asia, while other countries in the Arabian Peninsula and the EU have the largest share of imports. A large part of the trade has not been included in the official figures due to smuggling and extensive black market.
An important source of income is money that Yemeni guest workers in other countries send to their home country. In 2013, Saudi Arabia tightened visa rules for foreign workers, which is estimated to have forced more than 650,000 Yemenites to return home. According to the World Bank, Yemeni families received $ 3 billion from abroad in the same year, which corresponds to about a tenth of GDP. Subsequently, the Saudi government has taken new steps to strengthen its own economy, and an additional 200,000 Yemenis have been forced to leave the country. One historical bracket is that such a mass deportation of Yemeni guest workers caused difficulties earlier: in 1990, when the then Sanaa government supported Saddam Hussein’s invasion of Kuwait, Saudi Arabia punished Yemen with expulsions. There are believed to have been a million Yemenites who lost their livelihoods then,
The state’s weak grip on society – Yemen’s internationally recognized government controls only parts of the country – makes it difficult to collect taxes. The lack of security also hinders development and frightens foreign investors; several oil companies left the country after the outbreak of war in 2015 and few have returned. There is a large black sector and corruption is widespread. Low wages in public administration are a reason why government employees receive money under the table.
Foreign debt was a heavy item in the mid-1990s, but became more manageable since several lenders wrote down their claims and thanks to the long-term price of oil. The debt, according to the World Bank, corresponded to just over one fifth of GDP in 2013. At that time, the situation was relatively light, compared to today’s when Yemen’s economy has shrunk over a number of years. Now the outside world is facing the need to contribute to a huge effort for reconstruction.
In 1999, Yemen gained observer status in the World Trade Organization (WTO). The negotiations then went on for a very long time, but in June 2014 Yemen finally became the 160th WTO member.
FACTS – FINANCE
GDP per person
US $ 944 (2018)
US $ 26,914 million (2018)
-2.7 percent (2018)
Agriculture’s share of GDP
4.0 percent (2018)
Manufacturing industry’s share of GDP
3.8 percent (2018)
The service sector’s share of GDP
13.5 percent (2018)
14.7 percent (2019)
Government debt’s share of GDP
64.8 percent (2018)
US $ 7,186 million (2017)
US $ 473 million (2016)
US $ 6,798 million (2016)
– US $ 2,419 million (2016)
Commodity trade’s share of GDP
40 percent (2018)
Main export goods
crude oil, oil products
Largest trading partner
IKina, Thailand, India