Yemeni officials and economists say the growth rate of the Yemeni economy will decline significantly this year, possibly facing negative growth levels, due to the political crisis that has rocked the country since February.
The Yemeni economy grew at a 5-6% rate over the past five years according to Yemeni government official data, but a number of experts told Al-Shorfa that the growth rate could drop to -1% or -2% this year. At best, it could fall back to 0%, they said.
Deputy Minister of Planning and International Co-operation Dr. Mutahar al-Abbasi told Al-Shorfa that the country's political crisis has led to stoppages in most investment sectors, as well as stoppages in the activities of some private sectors.
"The general budget is facing difficulties, among them the stoppage of the public investment programme, coinciding with a cut-off in aid from donors, which will cause the rate of economic growth to drop precipitously," he said.
However, al-Abbasi said that halting expenditures of general budget allocations to the public investment programme will generate a surplus that ought to mitigate the growth shortfall.
"A number of sectors, such as the agricultural sector and some business sectors, are still active due to existing market demand for their products, which will spur continued production, despite the rise in prices due to the rise in oil derivatives prices," he said.
Dr. Hassan Farhan, professor of economics at the University of Sanaa, attributed the drop in growth to several factors, including the stoppage of the public investment programme, whose contribution to the GDP is 28-30 %.
"We are in the last quarter of the year; should there be a breakthrough in the political crisis, new investments will not provide motivation, because time is very short," he said.
The second reason for the decline in the growth rate, according to Farhan, is the halt of most of the private sector's activities due to the lack of oil derivatives or their high prices, and the almost total loss of electricity.
The private sector, according to Farhan, represents 70% of the gross national product, and its decline will drag the growth rate down.
He explained, "This sector is semi-paralysed, because small and medium industries, which constitute most of the sector, are unable to cover the cost of oil derivatives or private generators to provide electricity", forcing many of them to stop operating.
Governor of the Central Bank of Yemen Mohammed bin Hammam said on September 15th in press statements at a meeting of Arab central bank governors in Doha, that the economy could contract "if the political crisis continues". He declined to provide a specific percentage because, in his words, of a lack of data from the affected sectors.
Dr. Taha al-Faseel, an economist and advisor to the Ministry of Industry and Trade, told Al-Shorfa that the political crisis added new burdens on the national economy and will lead to a significant decline in the growth rate.
He also expects the growth rate this year to fall to a negative value, after reaching 5% last year.
"This decline is due to a contraction amounting to 17% in non-oil sectors, 14% in the oil sector, 18% in services, and 10% in agriculture," al-Faseel said. He also pointed to the worsening state of the general budget due to the continuing decline in revenues, lack of foreign funding, mounting current costs, and the almost complete cessation of investment and capital expenditures.