Yemen Streamlined Country Diagnostic 2025 - Resilience Beyond Fragility: Empowering Jobs and Livelihoods - Annex 6

Jul 19, 2026

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Yemen Streamlined Country Diagnostic 2025 analyzes development challenges and emerging opportunities amid a decade of conflict and deep economic fragmentation. It assesses macroeconomic contraction, falling living standards, collapsed basic services, and widespread poverty, alongside urgent humanitarian needs and reconstruction requirements estimated at USD 20–25 billion. The diagnostic evaluates developments since 2014, describing two diverging economic zones, governance constraints, weak resilience, and climate and import dependence, to inform World Bank Group engagement through the forthcoming Country Partnership Framework.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages10

Reading Time25 min

Country Context and Key Recent Economic and Social Developments

Macroeconomic Performance: Subdued Growth and Declining GDP Per Capita

Economic Fragmentation, Weak Governance, and Structural Challenges Characterize a Highly Complex FCV Environment

Public Disclosure Authorized Pub lic Disclosure Authorized Annex 6: YEMEN STREAMLINED COUNTRY DIAGNOSTIC 2025 Resilience Beyond Fragility: Empowering Jobs and Livelihoods Yemen stands at the epicenter of one of the world’s most acute humanitarian, economic, and social crises. A decade of conflict has devastated the economy, fragmented institutions, and left the population facing unprecedented hardship. The ongoing conflict between the Internationally Recognized Government (IRG) and the Houthi movement has created two distinct economic and administrative zones, deepening fragmentation and complicating prospects for peace and recovery. Years of conflict have halved economic output and caused widespread infrastructure devastation, with approximately 75 percent of Yemenis now living in poverty and basic services largely collapsed. Food insecurity, malnutrition, and violence are among the highest globally. Reconstruction needs are estimated at USD 20–25 billion, as over a third of homes, schools, hospitals, and water/sanitation facilities are damaged or destroyed. Humanitarian needs remain vast and largely unmet: 19.5 million people—including 15 million women and children—require assistance, and half the population faces food insecurity. Yemen’s rapid population growth, high vulnerability to climate change, and acute dependence on imports further intensify these challenges, while unreliable data complicates policy responses and underscores the need for robust analysis to inform recovery and development efforts. This Streamlined Country Diagnostic (SCD) provides an assessment of Yemen’s development challenges and opportunities, drawing on existing country diagnostics to inform the forthcoming Country Partnership Framework (FY26–FY28) . The SCD analyzes key developments since 2014 and evaluates the most pressing challenges and emerging opportunities. 3 Its aim is to inform strategies that foster inclusive and resilient growth in Yemen by strengthening job opportunities and livelihoods, supporting the country’s transition beyond fragility, and guiding the World Bank Group’s future engagement. 1. Country Context and Key Recent Economic and Social Developments Macroeconomic Performance: Subdued Growth and Declining GDP Per Capita 1. Yemen’s economy has endured one of the world’s most severe contractions over the past decade, driven by persistent conflict and instability. Between 2015 and 2024, real GDP shrank by 43 percent, while real GDP per capita fell even more sharply – by an estimated 58 percent - reflecting both economic collapse and rapid population growth. The impact on living standards has been dramatic: nominal GDP per capita plunged from USD 1,430 in 2014 to just USD 469 in 2024, a staggering 70 percent drop. This precipitous decline has pushed Yemen from the 40th to the 3rd poorest country globally in terms of nominal GDP per capita. 2. Although 2022 briefly offered hope for economic recovery, this optimism was short-lived. The April UNsponsored truce temporarily halted hostilities, reduced conflict-related fatalities, and spurred economic activity, creating a window for potential stabilization. However, the truce expired in October 2022 without a lasting political settlement. While the military truce within the country has largely held, the economic warfare has intensified and conditions have deteriorated rapidly. The downturn was exacerbated by the Houthi movement’s blockade of IRG oil exports beginning in October 2022 and further compounded by the ban on Marib LPG sales in Houthi-controlled areas from May 2023 onwards. As a result, Yemen’s economy remains under severe strain: in 2025, national real GDP is projected to contract by 1.5 percent for the third consecutive year, and nominal GDP per capita is expected to fall by another 14.2 percent. 3. Over the past three years, both IRG and Houthi-controlled areas have experienced accelerated economic deterioration, albeit through different channels. In IRG-c

FAQs

What core crisis does the diagnostic describe for Yemen?

Yemen faces an acute humanitarian, economic, and social crisis driven by a decade of conflict, fractured institutions, and widespread hardship, including collapsed basic services and severe poverty.

How has Yemen’s economy performed over the past decade?

Real GDP contracted substantially between 2015 and 2024, GDP per capita fell sharply, and the diagnostic highlights dramatic declines in nominal GDP per capita and a deterioration in living standards.

Why does the diagnostic emphasize economic fragmentation between zones?

It explains that conflict has created two distinct economic and administrative zones with different policies and mechanisms, leading to divergent pressures on inflation, currency, liquidity, and service delivery.

Jul 19, 2026

Upload by Levi