Yemen's economy.. after 8 years of war
English - Tuesday 03 January 2023 الساعة 07:51 am
Al-Mokha, NewsYemen, exclusive:
The escalation of the conflict in Yemen, now eight years old, continues to disrupt and destroy the lives of Yemenis, their families, infrastructure, and the environment, and has caused an unprecedented humanitarian, social and economic crisis.
Yemen lost between $170 and $200 billion of its GDP from 2015 to 2022 due to the conflict, based on the 2014 GDP of $43.2 billion, but aid covered less than 10 to 12 percent of the need.
The Houthi militia, Iran's arm, invaded Sana'a on September 21, 2014, overthrew state institutions by force of arms, and continues to wage war against Yemen and Yemenis.
Oil production, which constitutes 60% of the state's resources, remained much lower than pre-conflict levels, despite slight improvements in recent years, but it has stopped production and export permanently, since the Houthi militia banned oil exports in mid-October 2022.
Although Marib oil continues to be produced for domestic consumption, its revenues are outside the control of the state, and are not included in the public finance accounts of the Central Bank of Yemen, which is based in Aden.
The suspension of external public debt service also remained in place, with the exception of payments from the International Development Association and the International Monetary Fund.
Public finances are still under severe pressure, in addition to the rise in international prices of primary commodities, which led to high inflation indicators and put great pressure on the currency in the country
Economic activity suffers from hostilities, the interruption of basic services (electricity and communications) and a shortage of inputs, which was exacerbated by double taxation and distortions resulting from inconsistent policy decisions by the two authorities.
During the past eight years, oil exports declined, and the value of the riyal collapsed by up to 80%. This was the main driver of the price hike, and Yemenis lost confidence in the national currency, which the war trade divided into two currencies with different values and advantages.
Yemen's excessive dependence on imports has also led to an increase in the prices of imported foodstuffs. Despite the sharp increase in imported prices with the depreciation of the riyal, Yemen relies on importing 90% of its basic food commodities.
Because of the fragmentation of the economy, multiple checkpoints, double taxation and high insurance costs have driven up food prices.
Most Yemenis suffer from power outages of between 12 and 23 hours a day, while more than a third of the population has no electricity at all.
While only 27% of Yemenis have Internet access, which is among the most expensive and least reliable in the world.
Combined, these factors have isolated Yemenis from the necessary education and economic opportunities that enable them to build a sustainable future.
The cost of living in light of the conflict has doubled by 300% and the work required to feed a family of seven for a month has increased from 48 to 80 hours, while employment levels have fallen to around 60%, according to data from the Ministry of Planning and International Cooperation.
It is estimated that overall unemployment reached 34% in 2020, and with youth unemployment reaching 60%, Yemenis with jobs are increasingly paying for their less fortunate relatives.
Since 2015, according to the United Nations, the percentage of women heads of households has jumped from 9% to 30%, with unskilled women often taking on additional responsibilities under precarious conditions.
In all, the extension of the armed conflict, the collapse of the business sector, and the interruption of public sector salaries changed the nature of the labor market, while female participation in the labor market in general increased.
Despite the provision of more than $20 billion in humanitarian aid to Yemen, conflict and deprivation continue, more than half of Yemenis still suffer from hunger, and among the five million internally displaced persons, 80% are women and children.
The social situation is precarious, as the United Nations estimates that more than 24 million people, about 80% of the population, need humanitarian assistance.
According to the Sana’a Center for Studies, the international humanitarian response has not paid enough attention to the economic aspects of the crisis that has prolonged the conflict. Instead, it has promoted the narrative that Yemen is on the brink of famine without continued food aid, and pushed short-term food aid as the default method of response.
Despite the lack of reliable information on the economy, as official statistics are no longer issued, the World Bank confirms that the Yemeni economy is largely informal and relies on remittances and aid flows to finance consumption.
Political efforts to resolve the Yemeni crisis focused on top-down approaches such as peace talks at the national level, reunification of central banks, and negotiations to resolve restrictions on trade and imports.
Economists stress that despite the importance of these efforts, if successful, it will take many years before the desired benefits reach Yemeni citizens.
