Republic of Yemen: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Republic of Yemen

The 2025 Article IV Consultation discusses that after years of civil war, Yemen remains one of the world’s most fragile states. Since 2014, Yemen’s internal conflict has generated severe macroeconomic vulnerabilities and sharply reduced income per capita, leaving more than half the population in need of humanitarian assistance. The halt in oil exports in 2022 pushed the economy into deep recession and transformed the country into a net oil importer. Fiscal and external imbalances widened initially but have since narrowed due to compressed public spending and weak private demand amid high inflation, currency depreciation, and declining real incomes. Growth is expected to recover gradually from 2026, rising from about 0.5 percent to 2.5 percent by 2030, supported by non-oil exports, remittances, and development initiatives. Inflation should ease as monetary financing declines and global prices stabilize. Structural reforms are essential, including strengthening governance and anti-corruption frameworks, improving the business climate, and reforming the electricity sector through cost-reflective tariffs, targeted support for vulnerable households, and strategic infrastructure upgrades.