Yemen Economic Outlook
A war-torn economy in deep crisis:
Yemen’s economy has been devastated by years of conflict, with infrastructure destruction, declining oil production, and widespread humanitarian crises severely limiting economic activity. GDP has contracted significantly since the outbreak of civil war in 2014, and basic economic functions have been severely disrupted. Inflation, food insecurity, and currency instability have made economic recovery extremely difficult.
Oil and aid-dependent revenues:Before the conflict, oil exports were a primary source of government revenue, but production has sharply declined due to ongoing fighting and infrastructure damage. Yemen now relies heavily on international aid, remittances from Yemenis abroad, and limited domestic trade to sustain its fragile economy. The fragmented governance between different factions further complicates economic management.
Humanitarian crisis and economic collapse:The country faces one of the world’s worst humanitarian crises, with widespread poverty, famine, and lack of access to basic services. Millions of Yemenis depend on food aid, while currency devaluation has led to skyrocketing prices of essential goods. The conflict has displaced millions, further straining economic recovery efforts.
Yemen’s economic outlook:Without a political resolution to the conflict, Yemen’s economic situation will remain brittle, with the economy unlikely to recover meaningfully in the near term. Any future stabilization will require massive international investment, reconstruction efforts, and governance reforms. Even with peace, rebuilding infrastructure, reviving oil production, and restoring investor confidence will take years. The country remains in dire need of long-term development aid and structural reforms to rebuild its shattered economy.
Yemen's Macroeconomic Analysis:
Nominal GDP of USD 23.5 billion in 2022.
GDP per capita of USD 706 compared to the global average of USD 10,589.
Average real GDP growth of 6% over the last decade.
Sector Analysis
In 2011, services accounted for 42% of overall GDP, manufacturing 9%, other industrial activity 44%, and agriculture 5%. Looking at GDP by expenditure, private consumption accounted for 126% of GDP in 2016, government consumption 9%, fixed investment 2%, and net exports -37%.International trade
In 2019, manufactured products made up 1% of total merchandise exports, mineral fuels 0%, food 99%, ores and metals 0% and agricultural raw materials 0%, with other categories accounting for 0% of the total. In the same period, manufactured products made up 31% of total merchandise imports, mineral fuels 28%, food 39%, ores and metals 0% and agricultural raw materials 1%, with other goods accounting for 1% of the total. Total exports were worth USD 0 billion in 2023, while total imports were USD 5 billion.Main Economic Indicators
Economic growthThe economy recorded an average annual decrease of 6.0% in the decade to 2023. To read more about GDP growth in Yemen, go to our dedicated page.
Fiscal policy
Yemen's fiscal deficit averaged 5.6% of GDP in the decade to 2022. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 17.0% in the decade to 2023. For more information on Yemen's unemployment click here.
Inflation
Inflation averaged 20.6% in the decade to 2022. Go to our Yemen inflation page for extra insight.
Monetary Policy
Yemen's monetary policy rate ended 2024 at 27.00%, up from 15.00% a decade earlier. See our Yemen monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the rial weakened by 14.1% vs the U.S. dollar. For more info on the rial, click here.
Economic situation in Yemen
Yemen’s economy appeared to fall deeper into the economic abyss over the past month. In late January, the Yemeni rial—used in the south of the country—fell to a record low of YER 2,200 per USD, depreciating from YER 1,700 in the same period in the prior year. In addition, the south of Yemen—where the internationally recognized government is located—was attacked by Houthi rebels, which control the north of the country. Adding to the bad news, U.S. President Donald Trump issued an executive order in January that restored the Houthis’ prior designation as a terrorist group. This may lead the Houthis to renew attacks on Western shipping, which had been paused as a result of the recent Hamas-Israel ceasefire agreement. It may also risk derailing peace talks to end the civil war, a prerequisite if the economy is to recover any of its former vigor.Yemen Economic Forecasts
Projections out to 2034.7 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 6 expert analysts.
Want to get insight on the economic outlook for Yemen in the coming years? FocusEconomics collects projections out to 2034 on 7 economic indicators for Yemen from a panel of 6 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Yemen economy. To download a sample report on the Yemen's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.