Yemen Economic Forecast

Following Saudi Arabia and Iran’s rekindling of relations in early March, in early April, a Saudi Arabian delegation and an Omani mediation team traveled to Yemen to hold talks with the Houthis. Meanwhile, in mid-April, a major prisoner swap between Yemen’s warring parties took place. These developments reflect increased efforts to reach a ceasefire agreement. Despite these positive advancements, the economy remains in a dire state due to the severe humanitarian crisis and civilians needing food assistance. In other news, the UN’s ship in which the Safer’s oil barrels are to be unloaded set sail to the Red Sea in early April. Meanwhile, at its 4 May conference, the UN held a pledging event aiming to raise the final USD 29 million—of the USD 129 million total—needed for the operation.

Food prices will continue to be key drivers of inflation, which will remain in double digits this year. Lack of basic goods, the conflict, and the evolution of the currency’s strength are key factors to watch. Additionally, dwindling international reserves may not be able to cover a higher import bill due to still-elevated prices for fuel and food—around 90% of which is imported.