Aden (South24)

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The World Bank revealed in its latest report, "Yemen Economic Monitor," that the Yemeni economy faces worsening challenges as the conflict [..] and regional tensions continue, exacerbating the country's humanitarian and economic crisis.

The 2024 fall report, titled "Confronting Escalating Challenges," showed expectations of a 1% contraction in GDP in 2024, after a 2% decline in 2023, further deteriorating the real GDP per capita by a 54% decline since 2015. Amid the ongoing conflict, more than 60% of the population suffers from food insecurity, as the ability to obtain adequate food has become weak for most Yemenis.

The report highlighted the impact of the Houthi blockade on oil exports, which led to a 42% decrease in the internationally recognized government's revenues in the first half of 2024, and disrupted its ability to provide basic services. The halt in oil exports and the government’s heavy reliance on imports have put pressure on the local currency, with the Yemeni riyal depreciating in the Aden market from 1,619 riyals to the dollar in January to 1,917 riyals in August 2024.

The report indicates that living conditions have worsened since 2023, with World Bank surveys in July 2024 showing a doubling of food deprivation in some governorates. At the same time, shipping traffic through the Bab al-Mandab Strait and the Suez Canal has declined by more than 60% due to regional tensions in the Red Sea, but this has not yet led to a significant increase in consumer prices, according to the report.

The report warns of additional risks to the banking sector, amid tensions between the Houthis and the government over regulatory oversight, despite regional and international mediation attempts to calm the situation. The report suggests strengthening the resilience of institutions to confront inflation, reforming public finances, and facilitating trade and financial services to ease economic pressures and prevent further division.

The report concludes that Yemen’s economic prospects in 2025 remain bleak, due to ongoing internal and regional conflicts that are deepening fragmentation and the humanitarian crisis. However, a lasting peace agreement could stimulate rapid economic recovery, which would open the way for Yemen to receive much-needed international aid, reconstruction, and reforms to ensure economic and country stability.