Yemen is one of the poorest countries in the Middle East and one of the low income countries in the world. Yemen is an oil exporter country where oil contributed significantly to the GDP and government revenue, as oil reserves are depleting the country must shift to other sectors to boost the economy. The future economic composition need to be a well diversified economy fueled by domestic production to meet the country’s growing need. After IMF recommendation the country enforced economic reforms to boost the non oil sectors of the economy.
Ruling government faces challenges in terms of Civil unrest, Islamic Extremists , Political instability which affects the economy of the country. The insurgents focusing on destroying and sabotage the oil pipelines which bleeds the government spending. GDP dropped more than 10% due to the Arab revolution in 2011 and the year 2012 has shown only a modest growth in the economy. Agriculture sector contributes to 7.9% to GDP while industry contributes to 40.6% and services cover the rest. Yemen gets a large amount of Foreign Aid from IMF and world Bank to make structural changes in the economy. Major part of the workforce still works in the agriculture sector. As the country faces severe water crisis and problems will continue , the industrial and service sector will face its impact in future.
Yemen Economic Performance GDP and Inflation 1991-2013
|Year||GDP%||Inflation %||Year||GDP %||Inflation %|
Yemen recovered from the economic crisis of 2011 and continued to grow in 2013 at a rate of 4.4%. Boost in construction activities and private bank lending has supported the growth in the economy. The country still faces high rate of poverty and unemployment among the young people which need to be effectively addressed , growth in the private sector can boost the economy and provide much needed employment opportunities. IMF recommended to focus on inclusive growth to all people as well as macro economic stability effectively spending the government money and implementing economic policies. Focus should be given to boost the private financial sector as well as energy sector.
Agriculture is one of the major part of Yemen economy which produces significant domestic product and provides employment. But the Country faces severe water crisis which needs better management if the problem need to be solved. The fishing industry is relatively underdeveloped but it has export potential. The mountainous region is offering a little favorable condition for the agricultural growth. The primary agricultural products in Yemen include fruits, grain, cotton, coffee, vegetables and khat. However, for satisfying the basic requirements, Yemen has to depend on imports from other countries.
Yemen’s tourism industry is hampered mainly due to security concerns as well as lack of support infrastructure. Tourism and services sector are very difficult to grow as it needs a lot of preparation and great deal of development to significantly boost the industry.
Major industries in Yemen are petroleum refining industry, cotton textiles industry and leather good industry. Besides these, food processing, cement, crude oil and handicrafts industry are also developing very fast. Apart from this, the nation has acquired international fame through the production and refining of petroleum. There is no doubt in the fact that the oil export has accumulated a huge amount of profit and has contributed in the economic growth from late 1980s. Not only oil, coffee and dried fish are also exported to the foreign countries.
Last Updated on : 10th Oct. 2013