Yemen - Introduction

Yemen is a strategically important country in the Arabian Peninsula, overlooking the Mandab Strait, and has great economic potential with its large labor force, long shoreline, and agricultural and hydrocarbon resources. Yet, the country is one of the poorest and most fragile countries in the world. Poverty, malnutrition, and unemployment are widespread, and water resources are very scarce. The poor social indicators add to social tensions, complicate the management of the economy and contribute to security challenges. Furthermore, high dependence on hydrocarbon resources exposes the economy to external shocks.

Yemen, in contrast to the Gulf states, is a nation characterized by intense poverty and severe structural limits to sustainable economic growth. It is a fragile state in which the central government exercises limited control over territory, particularly in the northern tribal regions. Yemen’s modern history is rife with internal conflict.

The country continues to suffer from internal strife, decentralized political legitimacy, underdevelopment and corruption. A tribal rebellion in the north near the Saudi border percolated along as a vestige of the historic Imamate. In the south, latent tensions connected to unity and the civil war festered as southerners protest political and economic marginalization. With the onset of armed conflict in March 2015, real activity collapsed, the country’s human and real capital suffered, large external and internal imbalances emerged, and the fiscal deficit surged.