Yemen Economic Outlook
The war-torn country’s economy will have remained in a dire state so far this year. However, in late February, a general goods cargo ship docked at Houthi-controlled Hodeidah for the first time in at least seven years. This feat signals further progress in trust-building between the warring parties, boding well for peace talks. In further positive news, in late February, Saudi Arabia deposited USD 1 billion to Yemen’s Central Bank, which should alleviate some pressure on the Yemeni rial. Meanwhile, in late February, the UN appealed for USD 4.3 billion in aid for this year; the funds would be used to support and protect citizens. So far, USD 1.2 billion has been pledged. For reference, in 2022 USD 2.2 billion in funding was secured. Additionally, the UK recently launched a new food security program that will help up to 40,000 people on a monthly basis.
While it will remain in double-digit territory and be among the highest in the region, inflation should nearly halve this year from 2022. Upside risks include a volatile currency and a high import bill due to still-elevated prices for fuel and food—around 90% of which is imported. The potential return to conflict is another factor to monitor.