Yemen Socio-Economic Update, Issue 56 - January 2021
WED, 05/05/2021 - 12:45
Publishing this issue of the YSEU coincides with the start of a new calendar year 2021, and ushering in a year full of hope and aspiration towards the prospects of development, peace and prosperity. From month to month, this YSEU bulletin has proved to be of high professionalism and high quality in dealing with the economic and development affairs , which in our opinion, qualifies it to be the Key source for credible, reliable and widespread information, and a commendable and valued partnership with UNICEF since the first issue.
This issue of the YSEU bulletin comes as a continuation of that approach and highlights the most prominent macroeconomic developments and some issues of special importance. As we enter a new era, with hopes are high for Yemen’s economy to recover, move its growth engines again and unleash its energies that have been weakened by lean years and conflict, and productive capacities reduced due to successive crises. In addition, a set of factors have distorted Yemen’s financial, material and HR structures, thus, compromising the accumulative progress and economic gains made over the past years of development.
Economic activity has contracted to an unprecedented level during the past six years, where it lost more than US $ 90 billion GDP in direct losses, in addition to indirect losses in the institutional and human structures. In addition, the internal and external macroeconomic balances were disrupted too; public finance suffered a decline in its resources, with sharp decrease in expenditures amid rising public budget deficit to insecure levels. Subsequently, this resulted an increase in the volume of domestic debt to a level equal to or close to the size of the domestic product, while external balance suffered a blow and the trade balance witnessed a remarkable deficit due to dropped flow of foreign currencies, whether oil and gas revenues or private and official remittances. These imbalances triggered violent shocks in the exchange market, including devaluation of the national currency against foreign currencies, which fell by about 180% of its real value. It can be said that the negative effects have spilled through all economic variables, especially soaring prices, deteriorated standard of living and decreased average income per capita, which itself lost about 60% of its value in dollar terms.
Yemen’s economy faces multiple challenges and crises with their associated severe impact, mainly the recurring fuel shortage crisis, which has had the greatest impact on the various service sectors, especially the electricity and health sectors. Meanwhile, the food security and humanitarian crisis has left behind 60% of the population exposed to food insecurity, with its subsequent negative on malnutrition and productivity. In addition to that, the economy was taken by the Coronavirus pandemic surprise, which negatively affected the economy and tossed it into a deep recession.
This issue of YSEU bulletin seeks to analyze and evaluate the most prominent economic and social developments, explore some windows of hope for recovery and economic growth, and dispel the clouds of recession and deflation overshadowing it.