General Information

Sources: DFAT; Stateman's Yearbook 2000.

Economic Indicators

Trade Indicators

Source: WTO , US$ 000 000 000.

Economic Overview

Oil and agriculture are the mainstays of the Yemeni economy, with oil the most important export earner. Agriculture remains the largest sector in the economy accounting for about 30% of real GDP in the 1990s. Real economic growth has been achieved since 1994. 1

Manufacturing accounts for about 12% of GDP (1998) with oil refining account for about half of this. Most industry and manufacturing is small scale and includes food processing, garments and textiles, wood products and furniture. 2

Proven reserves of 10-13 trillion cubic feet could sustain a LNG export project. Medium-term economic prospects for the country depend upon the outcome of the gas export project and plans to upgrade port facilities at Aden. Progress continues in making Aden a free zone and finalising plans to construct a modem container port and other facilities in Aden. 3

Over the past year, despite impressive gains in currency stability and a significant reduction in inflation, Yemen's economy has been hard hit by the precipitous fall of world oil prices. Similarly, the Asian financial crisis posed a serious threat to Yemen's long term economic prospects, such as development of the Yemen LNG project. Most analysts expect real GDP growth to continue to improve modestly over the next few years barring a significant reversal in world oil prices. 4

Regulatory Environment

In 1995, the government embarked on an economic reform program that from 1999 included an ambitious privatisation program. 5 Foreign investment is restricted in some areas, primarily to protect existing production and small individual investors. 6

Since July 1, 1996 customs has valued imports at the rate of exchange set by the market and Law 37/1997 regulates the new tariff on imported goods. 7 The government eliminated import licensing in 1996. 8 However, the government requires licensing of exports for statistical purposes. The Ministry of Fisheries limits the export of certain categories of seafood products.

Multiple organisations within the Yemeni government are responsible for standards and product quality control. Among them are the Standardisation, Meteorology, and Quality Control Organisation of the Ministry of Industry, the Customs Authority, and the Environmental Department of the Ministry of Urban Planning. Yemen is a Member of the International Standards Organisation (ISO 9000), the Organisation of Meteorology International League (OMIL), and the Arab Standards Organisation. The Standardisation, Meteorology, and Quality Control Organisation has the responsibility for testing imports and can order their removal from the market if they do not meet standards. 9

Current Process of Liberalisation

The government has entered into negotiations with the IMF about a structural adjustment program. The World Bank is eager to reactivate over US$300 million in project assistance and is willing to add new funds once an agreement with the IMF is implemented. The IMF program includes major structural reforms, including floating the currency, reducing the budget deficit, cutting subsidies, and rationalising the civil service. In October 1997, the IMF approved enhanced structural adjustment facility; and in August 1998, and June 1999 mid term reviews were approved by the IMP. 10

The Yemeni government eliminated import licensing in 1996 and cut tariff rates into four bands between 5% and 25% ad valorem. The government instituted an excise tax on industrial inputs and a production tax on local manufacturers to create a level playing field between imports and local industrial products. 11

1. Country Profile: Yemen: 1999-2000 (The Economist Intelligence Unit, London, 1999), pp. 19 25
2. Ibid, pp. 30-31.
3. Ibid..
4. Ibid..
5. Country Profile...1999-2000, p. 21.
6. Trade Compass Country Commercial Guides, (http://www.tradecompass.com/library/books/com guide/)
7. TradePort....
8. Ibid..
9. Ibid..
10. Country Profile...1999-2000, p.21
11. TradePort....