GDP (US$ Billion)
World Ranking 117/192
GDP Per Capita (US$)
World Ranking 181/192
(in terms of GDP composition, 2017)
External Trade (% of GDP)
Currency (Period Average)
214.89 per US$ (2017)
After more than four years of sustained conflict, Yemen continues to face a series of humanitarian, social and economic challenges. The prolonged conflict is a key factor depriving millions of their livelihoods and jobs and driving poverty levels to over 80%. Yemen's public institutions are struggling with service delivery at even the most basic levels, and the situation has further been complicated by the lack of regular salary payments to many public workers. Despite the ongoing conflict, the economy is expected to return to growth for the first time in six years in 2019, although this is primarily due to a low base effect.
Sources: World Bank, Fitch Solutions
Major Economic/Political Events and Upcoming Elections
The leader of Al-Qaeda in Arabian Peninsula, Nasser al-Wuhayshi, was killed in a United States drone strike in Yemen.
President Abdrabbuh Mansur Hadi returned to Aden after Saudi-backed government forces recaptured the port city from Houthi forces and launched an advance on Aden.
United Nations-sponsored talks between the government and Houthis and former President Saleh's General People's Congress (GPC) commenced.
A United States raid on several suspected Al-Qaeda militants and civilians marked the first United States military action in Yemen under President Donald Trump.
Mainland China provided a grant of USD22.5 million in relief assistance to the Yemeni government.
Former president Saleh was killed after fierce fighting in the capital Sanaa.
Southern Yemeni separatists - backed by the United Arab Emirates - seized control of Aden.
Yemen's central bank hiked rates on certificates of deposit to 27%, up from the 15% level that it had held constant since 2014.
Sources: BBC country profile - Timeline, Fitch Solutions
e = estimate; f = forecast
Sources: CIA World Fact Book, IMF, World Bank, ILO
Date last reviewed: March 12, 2019
e = estimate for both imports and exports
Note: For exports, all the 2010-2017 values are estimates. For imports, only the data for 2014-2017 are estimates
Date last reviewed: March 12, 2019
Note: This is the latest direct data available (due to the effects of conflict since 2014)
Sources: Trade Map, Fitch Solutions
Date last reviewed: March 12, 2019
Trade in Services
e = estimate
Date last reviewed: March 12, 2019
- Yemen acceded to the World Trade Organization (WTO) in 2014. Yemen's WTO accession may eventually lead to a freer and more open investment climate for international investors in the years ahead.
- Yemen has expressed a desire to join the Gulf Cooperation Council (GCC). GCC member states are the primary trading partners with Yemen and are the most significant importers of Yemeni products (particularly for non-oil sectors, including agriculture and fisheries). Commercial relations between Yemen and the GCC gained additional significance in recent years due to the signing of numerous economic and commercial agreements and protocols. The GCC secretariat and Yemen have established joint ministerial councils, committees and working groups to study the commercial legislative and legal aspects in Yemen and the GCC states as part of a process for full membership to join the GCC. Yemen is now a member of certain committees of the GCC.
- Yemen acceded to the WTO in 2014 and is a member of the Greater Arab Free Trade Area (GAFTA). Yemen has been a member of the League of Arab States since March 1945. The league consist of 22 members, including GCC and other Arab countries. Nevertheless, Yemen still applies regionally high custom fees on regionally traded products. Some import restrictions apply and duties are applied to protect local industries.
- Use of non-tariff barriers has sometimes led to the delay or rejection of goods shipped to Yemen, but this is not common practice. In the past, Yemeni importers have experienced extended delays in customs clearance for the reason of reciprocity when Saudi customs stops or bans Yemeni agriculture products for health or other reasons. Restrictions on Saudi transportation trucks, in addition to regional insecurity and high transportation costs, affect the handling and delivery performance of export and import products.
- The existence of some trademarks infringements shows that intellectual property rights (IPR) enforcement is still a nascent area in the country.
- According to the latest available data, goods that enter the territory of Yemen are subject to customs fees as per the following: raw materials 5%, semi-manufactured materials 10% and ready materials 15%. Other items face the highest rate of customs fees: 25%. Customs fees are charged on imports on the basis of the ordinary value of the goods and includes shipment charges and insurance.
- In terms of the basic labelling requirements, production and expiry dates must be printed clearly on the packaging of all foodstuff or pharmaceutical products imported into Yemen in both Arabic and English.
- For all other products, GCC or International Standards apply. Imported beef and poultry products require a health certificate and a halal certificate issued by an approved Islamic centre in the manufacturer country.
- The import of pork and pork products, coffee, alcohol, narcotics, some fresh fruit and vegetables, weapons and explosives and rhinoceros horn is prohibited.
- A health certificate is required for shipments to Yemen of animal stocks, food and agricultural products. Imports of pharmaceuticals require a free sale certificate stating that the commodities in question are in free circulation in the country of export.
- All freight insurance on imports must be placed in Yemen.
- Yemen has stated that it will continue to implement the primary aspect of the Arab anti-Israel boycott.
- Yemen is a small oil-producing country outside of OPEC. Yemen allows foreign oil companies to exploit its oil fields in light of their capital and technological resources. Prior to the civil war, the oil sector accounted for 65% of its fiscal revenue and one-quarter of its GDP. Yemen's oil exports have been suspended since early 2015, with the ongoing conflict disrupting oil production, including facilities operated by foreign investors. Small-scale oil exports from Yemen resumed in 2017. International oil companies in Yemen, such as Austria's OMV, are also looking to resume oil production in south Yemen in the near term (contingent on a reduction in conflict risk).
Sources: WTO - Trade Policy Review, Fitch Solutions
Multinational Trade Agreements
- The GAFTA: GAFTA was established in order to create an Arab economic bloc that could effectively compete with other countries while ensuring that each country increased trade with each other. Its 17 nation members are Yemen, Jordan, United Arab Emirates, Bahrain, Saudi Arabia, Oman, Morocco, Syria, Lebanon, Iraq, Egypt, Kuwait, Tunisia, Libya, Sudan, Qatar and Palestine. The most important aspect of the agreement was that over the first 10 years (out to 2008 from inception in 1998) each member country would seek to carry out a 10% reduction in customs fees per annum as well as the gradual elimination of trade barriers. In March 2001, the member countries decided to reduce the period over which the reductions in tariffs could be made so as to speed up the process, and in January 2005 the elimination of most tariffs among the GAFTA members was enforced. For Yemen, GAFTA provides dynamic potential gains associated with the flow of exports and imports for members at preferential rates, which supports improved productivity and lowers trade cost.
- The Council of Arab Economic Unity (CAEU): Yemen is a member of the CAEU, which was established by Egypt, Iraq, Jordan, Kuwait, Libya, Mauritania, Palestine, Somalia, Sudan, Tunisia, Syria, United Arab Emirates and Yemen on June 3, 1957. It became effective on May 30, 1964, with the ultimate goal of achieving complete economic unity among its member states. The group aims to formulate regulations, legislations and tariffs, aiming at the creation of a unified Arab custom area, coordinate foreign trade policies with a view to ensure the coordination of the region's economy with the world economy, coordinate economic development and formulate programmes for the attainment of a joint Arab development project. The group also aims to harmonise policies related to agriculture, industry and internal trade.
- Trade and Investment Framework agreement (TIFA) with the United States: In 2004, Yemen signed a TIFA with the United States. The agreement creates a joint council for discussing a wide range of commercial issues and sets out a permanent dialogue with the expectation of strengthening bilateral trade and investment between the United States and Yemen. It is also considered to be the gateway to a free trade agreement with the United States.
Sources: Fitch Solutions, WTO Regional Trade Agreements database
Foreign Direct Investment
Date last reviewed: March 12, 2019
Foreign Direct Investment Policy
- Yemen’s General Investment Authority (GIA) is the national agency for FDI promotion and coordination. Incentives are offered to foreign companies investing in sectors targeted for development, including agriculture, transport, housing, tourism and industrial zones. In 1992, the government adopted a uniform investment code for both domestic and foreign investors which created the GIA to coordinate work among eight government agencies.
- In attending the Belt and Road Summit in Beijing in May 2017, the Yemeni delegation presented the country’s needs to reconstruct and develop infrastructure, calling for investment in the energy and mineral sectors. In July 2017, China provided a grant of USD22.5 million in relief assistance to the Yemeni government. Apart from trade with Yemen, many Chinese enterprises have invested in the country, particularly in the oil fields exploration (e.g. Sinopec) and telecom infrastructure (e.g. Huawei).
- In 2002, GIA worked with the World Bank's Foreign Investment Advisory service to update Yemen’s investment laws, reducing customs duties by 50% on imported raw materials and 100% on raw materials produced locally for agricultural and fisheries projects. Investments in the oil, gas, and mineral sector are subject to special agreements under the authority of the Ministry of Oil and Minerals and do not fall under GIA’s authority. Other sectors not covered by GIA include weapons and explosives manufacturing, banking and money exchange activities, and wholesale and retail imports.
- Since the unification of North and South Yemen in 1990, Yemen has embarked on a series of reforms aimed at stabilising the economy and increasing foreign investment. Reforms include the introduction of a General Sales Tax (GST) and a reduction in domestic petroleum and food subsidies. The IMF has helped introduce indirect monetary policy instruments, such as open market operations, rediscount facilities, and reserve requirements.
- Between 2003 and 2004, eight state-run companies were privatised, seven of them by public auction, with the remaining company being transferred to the Yemeni Economic Corporation (YEC). In 2007, the government announced the privatisation of an additional 15 factories.
- The Central Bank of Yemen (CBY) has made an effort to improve commercial banks’ accounting procedures and loan recovery rates. The banking system remains weak, however, with most commercial banks owned by large families who are reluctant to lend outside small circles. Foreign investors generally seek capital from outside the country.
- Investors may transfer funds in foreign currency from abroad to Yemen for the purpose of investment and may re-export invested capital, whether in kind or in cash, upon liquidation or project disposal. Net profits resulting from investment of foreign funds may be transferred freely outside of Yemen. Cash transfers are limited to USD10,000. Transfers above that amount must be approved by the CBY.
- Since Yemen’s unification in 1990, there have been no cases of outright expropriation of property owned by foreign investors. Yemen's investment law stipulates that private property will not be nationalised or seized, and that funds will not be blocked, confiscated, frozen, withheld, or sequestered by other than a court of law. Real estate may not be expropriated except in the national interest, and expropriation must be according to a court judgment and include fair compensation based on current market value.
- Yemen’s collective body of investment laws does not specify performance requirements as conditions for establishing, maintaining, or expanding investment. Law 23 of 1997 (as amended) regulates agencies and branches of foreign companies and firms and outlines the requirements for establishing a Yemeni agent. Chapter 3 of Law 23 permits foreign companies and firms to conduct business in Yemen by establishing foreign-owned and managed branches. Foreign commercial entities wishing to open branches in their own name must obtain a permit from the Ministry of Industry and Trade.
- In March 2008, the government amended a 1991 investment law allowing foreigners to operate businesses in Yemen without a Yemeni partner. Under a 2002 investment law, foreigners can own 100% of the land and can execute projects without a Yemeni agent and without obtaining import/export license from the Ministry of Industry and Trade or implementing Law 23 of 1997 (the investment law implemented in October 2002 has precedence over other laws). The 2002 investment law appears to contradict longstanding Yemeni commercial laws, however, which limit foreign ownership to 49%. The government is reviewing the laws in an attempt to remove inconsistencies, although work on the issue was temporarily suspended in 2011 as a result of the political crisis.
- Mortgage lending in Yemen is rare because of the reluctance of the court system to uphold the payment of interest or to accept land as a form of collateral – all products in this arena must be Shari'a compliant. In addition, Yemen has a long history of incomplete or inaccurate land records and frequent land ownership disputes, making the use of real estate as collateral difficult. In 2006, various agencies and ministry departments dealing with land ownership were merged into a common General Land Survey and Planning Authority. This new organisation oversees land ownership and registration, as well as modest government urban planning efforts.
- Yemen has a record of inadequate protection of IPR, including patents, trademarks, designs and copyrights. In late 2004, the Cabinet approved the Berne Convention for the Protection of Literary and Artistic Works, as well as the International Agreement on Protecting IPR. Parliament has yet to ratify these agreements. Yemen has yet to accede to any international IPR conventions and its IPR Law Number 19 of 1994 is not compliant with the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In December 2010, the legislation of trademarks and geographical indications, the amendment on trade registration law, the legislation of industrial design, patent and author law were passed and approved by parliament.
- Outside investors are best served by establishing a partnership with a Yemeni entity that knows the system, including an international arbitration clause in their contracts, establishing an escrow account and, where appropriate, demanding as much of the payment as they can get up front. In cases involving interest, most judges use Shari'a (Islamic) law as a guideline, under which claims for interest payments due are almost always rejected. Local commercial banks are sensitive to this problem, and lend primarily to large established trading houses well known to them.
- The Yemen Free Zone (YFZ) Public Authority was established in 1991 to develop the Aden Free Zone (AFZ). Yeminvest, a joint venture between the Port of Singapore Authority and the Bin Mohfoud Group of Saudi Arabia, was awarded the concession to develop the area. Dubai Ports World (DPW) now operates the Aden Container Terminal) in the AFZ. An industrial and warehousing estate called Aden District Park (ADP) was launched in November 2002. Furthermore, investment opportunities in light industry, repackaging and storage/distribution operations are welcomed. The free zones bill stipulated prospects for the establishment of other free zones in Yemen and the AFZ Public Authority is undertaking the relevant studies identifying such zones and relevant investment opportunities.
- In October 2018, The Qatar Fund for Development (QFFD) announced that it had signed a memorandum of understanding to fund the water and sanitation sector in Yemen. The financial assistance is being provided in co-operation with the United Nations Children's Fund. The funding will be used for the rehabilitation of water networks, and distribution and drainage networks in the country.
- Saudi Arabia announced plans in November 2018 to finance the redevelopment of Marib Airport in Yemen. The airport project will be financed under the Saudi Development and Reconstruction Program for Yemen (SDRPY).
Sources: WTO - Trade Policy Review, ITA, US Department of Commerce, Fitch Solutions
Free Trade Zones and Investment Incentives
|Free Trade Zone/Incentive Programme||Main Incentives Available|
|The YFZ Public Authority was established in 1991 to develop the AFZ||Free zone incentives include the possibility of 100% foreign ownership, no personal income taxes for foreigners, and a corporate tax holiday for 15 years (renewable for 10 additional years), 100% repatriation of capital and profits, no currency restrictions, and no restrictions on, or sponsoring required, for the employment of foreign staff.
Aden’s main selling point is its strategic location - particularly its proximity to Europe, Arab peer states and Asia. Projects at planning and development stage include cargo and air cargo village, heavy industry and petrochemicals estate, tourism estate and an international trade centre.
|General incentives||Incentives permitted under the law include, but are not limited to, exemption from customs fees and taxes levied on fixed assets of the project, tax holidays on profits for a period of seven years (renewable for up to 18 years maximum), the right to purchase or rent land and buildings and the right to import production inputs and export products without restrictions and registration in the import or export register.|
Sources: US Department of Commerce, Fitch Solutions
- Value Added Tax: 5%
- Corporate Income Tax: 20%
Source: Yemeni Tax Authority
|Type of Tax||Tax Rate and Base|
|Corporate Tax Rates (standard)||20%|
|Corporate Tax Rates (other rates by sector)||- 50% rate for mobile telecommunications companies
- A 35% rate applies to international telecoms service providers, cigarette manufacturers and importers
|Corporate Tax Rates for investment projects registered under law||15%|
|Corporate Tax Rates for small and medium sized enterprises||Range from 10%-20%|
|Dividends, Interest (no Withholding Tax)||10%|
|Royalties, Technical service fees (Withholding Tax)||10%|
|Social security contributions (all employers)||9%|
|VAT/GST (standard)||5% (10% for telecommunications services)|
Source: Yemeni Tax Authority
Date last reviewed: March 12, 2019
Visitors to Yemen must obtain a visa from one of the Yemeni diplomatic missions unless they come from one of the visa countries whose citizens may obtain visa on arrival. Until January 2010, Yemen had a visa on arrival policy for some 50 countries (predominantly Muslim). Tourist and/or business Visas are required by all except nationals of Iraq, Jordan and Syria, but citizens of these states must still get a doctor to confirm that they are good health. All applications are referred to Yemen and can take one to two months for the approval. Single entry visas are valid for three months, and multiple entry visas are valid for six months. Visitors must register with Yemeni authorities if they plan on staying in Yemen for longer than two weeks.
Conditions of stay
Yemeni law requires that all visitors/tourists register at a Yemeni police station or at the Passport and Immigration Authority within two weeks after arrival to Yemen. Failure to register will result in complications upon departure and a possible fine.
Work permits- requirements for employees
Getting a work visa for Yemen is difficult. Applicants will first need to get a Work Permit from the local authorities in Yemen. The Yemeni-based employer must assist in procuring the work permit and then the applicant must consult the consulate to find out specific terms for getting the work visa. According to the labour law of Yemen, foreign employees will be at risk of having their work permit revoked if they do not perform the works for which they are employed or lose vital qualifications that are required to execute the job.
1. Any employer who wishes to engage foreigners shall submit an application for permission to bring them into the country in the form to be specified by the Ministry, provided that such application shall include the following information:
- the name of the employer, his nationality, occupation and main place of work;
- the name and surname of the worker whose immigration is requested, his nationality, religion, date of birth, original place of residence and family status;
- the nature of the work to be performed by the worker and the nature of his previous work;
- the period for which the worker is expected to be employed;
- whether the worker has previously entered Yemen and the reason for and date of such entry, and the date of exit and reasons for leaving, the total number of foreign workers employed by the employer, the number of such workers engaged in the same work as that to be performed by the worker concerned and the number of Yemeni workers working for the employer and any such other information as may be required by the ministry or its competent office.
2. An application shall be submitted together with:
- a certificate from the Ministry or its competent office establishing that there are no Yemeni nationals available to perform the work to be done by the foreigner;
- a certificate establishing the technical qualifications and experience of the worker whose employment is requested, together with a certified Arabic translation thereof if the certificate is in a foreign language;
- a copy of the prospective contract of employment to be concluded with the worker, specifying in sufficient detail the amount of his remuneration and of any allowances and benefits in cash or kind; and
- a description of the projects and work being carried out by the employer at the time of the application, supported by the necessary documentary evidence; a description of the projects and work being carried out by the employer at the time of the application, supported by the necessary documentary evidence, and some other related documents or information as the ministry or its competent office may request.
3. Any employer employing a non-Yemeni worker must:
- within two weeks of the date of commencement of work, record, in a special register, the worker's name and all the information given in his work permit;
- appoint a Yemeni counterpart to the non-Yemeni worker, where such local counterpart is available with adequate qualifications and skills, for the entire duration of the non-Yemeni's employment, provided that a period of training is obligatory for both the non-Yemeni worker and his counterpart;
- notify the Ministry immediately of any changes in the non-Yemeni worker's status.
Residence permits are issued by the Passport and Immigration Authority, which is a department of the Ministry of Interior (the Ministry of Interior is located on Airport Road in Sana’a). In order to obtain a residence permit, foreign citizens must be sponsored by a Yemen-based individual or organisation. Foreign citizens with a valid residence permit wishing to leave Yemen are required to obtain an exit visa. The exit (and re-entry) visa is valid for two months from the date of issuance or until the date the residence permit expires, whichever comes first.
Visitors holding Israeli visas (or other Israeli entry documents) are denied entry to Yemen.
Sources: Government websites, Fitch Solutions
Sovereign Credit Ratings
|Rating (Outlook)||Rating Date|
|Standard & Poor's||Not Rated||N/A|
Sources: Moody's, Standard & Poor's, Fitch Ratings
Competitiveness and Efficiency Indicators
|Ease of Doing Business Index
|Ease of Paying Taxes Index
|Logistics Performance Index
|Corruption Perception Index
|IMD World Competitiveness||N/A||N/A||N/A|
Sources: World Bank, IMD, Transparency International
Fitch Solutions Risk Indices