Yemen is the poorest country in the Middle East. Half of the population lives below the poverty line. High unemployment and widespread illiteracy are fundamental problems.
The basis of the country’s economy consists of oil production; the oil industry accounts for 80-90 percent of export earnings. Important elements of the economy are international aid and transfers from Yemenis abroad. In order to obtain continued international loans and assistance, the country has been forced to privatize and cut public spending.
However, a large informal sector with smuggling and corruption has hampered the state’s ability to control economic development. According to COUNTRYAAH, the country has tried to pursue an active policy to develop the business sector outside the oil sector, among other things, efforts have been made to develop gas production.
Despite the country’s large dependence on oil production, agriculture is still important for the country’s economy. The soils in the northwestern regions are among the most fertile on the Arabian Peninsula, and the precipitation enables intensive but small-scale farming. In the southeastern regions, the conditions for agriculture are poorer, and cultivation is limited to certain river valleys and irrigated areas. Coffee used to be an important export crop, but has increasingly been replaced by khat (a drug), which is more profitable. It is estimated that 150,000 people are employed in trade and cultivation of khat. The most important grain is expensive, but also wheat, barley, maize, cotton, tobacco, dates and fruits and vegetables are grown. However, yields are low, and Yemen has to import more food. Recurring problems with droughts and floods have led to a highly fluctuating agricultural production, and therefore the construction of dams and irrigation systems is prioritized. However, the increase in irrigation has led to difficulties with water supply, as agriculture demands more and more of the available water.
The fishing waters in Adenviken are considered to have significant economic development potential. However, fishing in Yemen is undeveloped. From small boats near the coast, mainly fishes, octopus, mackerel and tuna are fished. Facilities for freezing and preserving fish have been built in recent years.
Oil in commercially exploitable quantities was discovered in the early 1980s, and several new discoveries have been made since then. Production is low compared to some neighboring countries, but still economically significant. Natural gas deposits have been known for a long time, but commercial exploitation began only in the late 00s; In 2009, the country began exporting natural gas.
The well-known oil reserves are expected to end in the early 2020s, forcing a priority on natural gas production. Yemen is also relatively rich in iron ore, salt, copper, sulfur, lead, zinc, nickel, gold, silver and uranium.
The manufacturing industry in Yemen is undeveloped. Oil refineries can be found in Aden and Marib. Stone salt is extracted in Salif and cement factories are located in Bajil and Amran. Other manufacturing includes the textile, leather, plastic, rubber and food industries. At the heart of Yemen’s strategy for industrial development is the economic free zone in Aden. So far, however, industrial establishments have taken place mainly in traditional sectors such as textiles, leather, food and building materials.
- According to AllCityPopulation, the capital city of Yemen is Sanaa with a population of 2.8 million (including suburbs, the UN estimate 2014). Other major cities include Taizz with a population of 556,000, Hodeidah with a population of 471,000 Aden with a population of 693,000 (estimation 2010).
Increased oil exports have led to the country since 1994 most often had a positive trade balance. There is extensive smuggling between Saudi Arabia and Yemen. Oil exports account for almost the entire export value, and the main exporting countries are Egypt and Thailand. Imports mainly comprise factory goods, means of transport, clothing, food and live animals, mainly from the United Arab Emirates, China and India.