Yemen 

Yemen country policy

Policy established 19 April 2011

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Country class: 7

Yemen country facts

Atradius Dutch State Business Economic Research 

Country Report last updated :  July 15 th, 2011 
Country :  YEMEN

Political Situation
Very Unstable

Head of state
President Abdullah Saleh, in power since 1978 in a military coup in the northern part of Yemen that merged with the south in 1990.

Form of government
Presidential government.

Internal Economic Situation
Hit By Political Unrest

General situation
After a high real GDP-growth in 2010 (+6.2%) due to newly operational gas export capacity (LNG), recession in 2011 because of the impact of the political turmoil and social unrest. Even oil output is projected to fall this year, and a number of investment projects have been delayed because of the deteriorated security situation. Persistent shortage of water is hampering agricultural output and fueling infation to 16% this year (risen food prices). As Yemen is still a cash economy, it has an underdeveloped financial sector (also depriving the Central Bank of a real monetary tool). Poor infrastructure and weak institutional capacity are economic constraints as well. 
 
External Economic Situation
Very Weak

Main sources of foreign exchange
Oil exports (90%), transfers.

Main foreign markets
Oil exports to Japan, Italy, South Africa, China, Thailand and Brazil.

Main expenses of foreign exchange
Imports for development port of Aden, oil- and LNG industry and consumer goods.

Balance of payments 
A growing importbill and fallen oil exports are contributing to a much weaker trade balance and current account deficit reaching 10% GDP in 2011. Private transfers from Yemeni workers in the GCC are only partally offsetting the deficits, putting pressure on the Riyal exchange rate.