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Yemen's economy is still facing significant challenges due to ongoing conflict and regional tensions, worsening the country's economic and humanitarian crises, as stated in the latest World Bank Yemen Economic Monitor.
The report predicts that Yemen's GDP will shrink by 1.0% in 2024, following a 2.0% contraction in 2023 and a modest growth of 1.5% in 2022.
From 2015 to 2023, Yemen saw a 54% decline in real GDP per capita, leading to the majority of Yemenis living in poverty.
The report also highlights that half of the population suffers from food insecurity, and there has been a notable increase in youth mortality rates.
The fiscal situation of the Internationally Recognized Government (IRG) deteriorated significantly in 2023, with fiscal revenues dropping by over 30% due to a substantial decrease in oil revenues and reduced customs revenues from the redirection of imports.
In response, the IRG made severe expenditure cuts, impacting essential public services and long-term economic growth.
The current account deficit expanded to 19.3% of GDP in 2023, up from 17.8% in 2022.
The blockade on oil exports had a significant impact on the trade deficit, while foreign reserves remained relatively stable due to financial support from partners, including the conversion of IMF Special Drawing Rights (SDRs).
Furthermore, the resumption of monetary financing by the IRG has increased inflationary pressures, with varying inflation rates across regions.
In Sanaa, deflation reached 11.8%, while Aden faced elevated inflation at 7.0% due to currency depreciation.
Moreover, the cost of essential goods has soared in Aden, leading many families to spend over 60% of their income on food alone.
Dina Abu-Ghaida, World Bank Country Manager for Yemen, emphasized that "Yemen's economic and humanitarian challenges are escalating, but there is still potential for recovery with the right support and strategies."
She also highlighted the critical areas for action, including addressing fiscal issues.
