Divided Yemen faces diverse economic policy challenges

Significance

This has contributed to rising food prices in the south. Yemen’s economy is suffering from years of conflict and deep political divisions as well as more recent problems, including the impact of COVID-19 precautions -- but also has more depth and resilience than is often recognised by international aid agencies.

Impacts

• The north-south split in Yemeni rial exchange rates will persist.
• The current fuel crisis will likely subside, but import difficulties will recur as long as the conflict continues.
• In the absence of a political settlement, the economy will be stagnant at best.
• Minimal investment will be limited to local companies in sectors such as telecoms and services, where consumer demand is strong.
• Trade will continue, excluded from external and internal border restrictions because of COVID-19.