NEWS

Yemen faces unprecedented economic and humanitarian challenges amid ongoing conflict

Children displaced by conflict receive food aid from a Kuwaiti charity in Marib (AFP)

28-06-2024 الساعة 7 مساءً بتوقيت عدن

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Aden (South24) 


A recent report by the World Bank has highlighted the severe economic and humanitarian crisis in Yemen. 


The report indicates that in 2023, Yemen's economy experienced significant setbacks with a sharp decline in nominal GDP per capita of 23.7%, and 4.1% in real GDP per capita. The national GDP contracted by 2% in real terms, following a brief rebound of 1.5% in 2022.


One of the primary drivers of this economic decline is the Houthi-imposed blockade on oil exports, which resulted in a dramatic drop in crude oil production from an estimated 37,000 barrels per day in 2022 to 17,000 barrels per day in 2023, marking a 67% contraction in the oil sector. Additionally, restrictions on utilizing LPG from Marib led to declined LPG production. 


The humanitarian situation remains dire, with approximately 2.7 million children projected to be acutely malnourished, including nearly 600,000 suffering from severe acute malnutrition. The youth mortality rate for those aged 15-24 has risen to 21.5 per thousand, up from 12.5 in 2014.


Regional tensions, particularly the confrontations in the Red Sea that began in November 2023, have exacerbated the economic decline and disrupted regional shipping and trade. The conflict has intensified fragmentation within Houthi-controlled and IRG-controlled areas, each with separate economic policies and institutions.


Remittances and official development assistance (ODA) have played a critical role in preventing a deeper economic contraction. ODA inflows increased by 9.9% in 2023, reaching $3 billion, primarily due to Saudi Arabia providing budget support to the IRG.


Yemen's economy is further burdened by structural issues such as reliance on external aid, remittances, and vulnerability to climate change. Deepening poverty has forced households to resort to extreme coping measures like child labor.


Related: Yemeni Children: Affected by Armed Conflict, Forced into Child Labor 


The macroeconomic outlook for Yemen remains bleak, with ongoing conflict and regional tensions posing significant risks. However, the report notes that a lasting truce or peace agreement could lead to rapid economic recovery, supported by external financial assistance and post-conflict reconstruction efforts.


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