2021 Index of Economic Freedom

Yemen

OVERALL SCOREN/A
WORLD RANK
Rule of Law

Property Rights16.5

Judicial Effectiveness19.7

Government Integrity17.0

Government Size

Tax BurdenN/A

Government Spending95.6

Fiscal Health48.9

Regulatory Efficiency

Business Freedom46.1

Labor Freedom57.7

Monetary Freedom54.6

Open Markets

Trade Freedom67.4

Investment FreedomN/A

Financial FreedomN/A

Create a Comparison Chart

See how Yemen compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 29.2 million
  • GDP (PPP):
    • $72.1 billion
    • 2.1% growth
    • -7.9% 5-year compound annual growth
    • $1,910 per capita
  • Unemployment:
  • Inflation (CPI):
    • 10.0%
  • FDI Inflow:
    • $-371.0 million

Numerical grading of Yemen’s overall economic freedom ended in 2015, and the continuing lack of reliable economic statistics for the country has prevented the resumption of grading in the 2021 Index. Prospects for an end to Yemen’s civil war and a peaceful rebuilding of its economy remain bleak.

The civil war has devastated the economy and destroyed critical infrastructure. Even before the current conflict, however, years of mismanagement and corruption and the depletion of oil and water resources had led to chronic poverty, underdevelopment, and minimal access to such basic services as electricity, water, and health care in much of the country. The conflict has aggravated that situation, and significant international assistance will likely be needed when the civil war ends.

IMPACT OF COVID-19: As of December 1, 2020, 619 deaths had been attributed to the pandemic in Yemen, and the economy was forecast to contract by 5.0 percent for the year.

Close

Background

Yemen, one of the poorest Arab countries, is highly dependent on declining revenues from its relatively small oil and gas reserves. Since 2014, a complex and intense civil war has created a humanitarian crisis and exacerbated economic problems, unemployment, and shortages of food, water, and medical resources. The Houthis, an Iran-backed Zaydi Shia rebel movement, ousted President Abed Rabbo Mansour Hadi’s government in January 2015. A military coalition led by Saudi Arabia attempted to restore Hadi to power in March 2015, but the Houthis retained significant territorial gains. There are now two opposing governments: Hadi’s, based in Aden, and the Houthis in Sanaa. Al-Qaeda in the Arabian Peninsula (AQAP) and the smaller Islamic State terrorist group have flourished in the resulting chaos.

Rule of LawView Methodology

Property Rights 16.5 Create a Graph using this measurement

Judicial Effectiveness 19.7 Create a Graph using this measurement

Government Integrity 17.0 Create a Graph using this measurement

Property rights and business activity are impaired by the ongoing war, corruption, nepotism, and patronage networks. The nominally independent judiciary is weak and susceptible to executive interference, and enforcement of judicial rulings is poor. A burdensome criminal judicial process creates a separate legal system for the political elite. Years of mismanagement, corruption, and depletion of natural resources have led to chronic poverty.

Government SizeView Methodology

The top individual income tax rate is 15 percent, and the top corporate tax rate is 20 percent. Political turmoil and civil conflict have severely damaged the overall fiscal situation, with the impact of the escalating cost of the ongoing conflict compounded by a collapse in oil and tax revenue. Economic policymaking has concentrated largely on marshalling limited fiscal resources to meet public salary payments and finance the conflict.

Regulatory EfficiencyView Methodology

Starting a business has become less costly, and bankruptcy processes to allow greater recovery of assets have been approved. The economy remains devastated, and the IMF predicted that inflation would rise substantially in 2020, mainly because of the lack of security.

Open MarketsView Methodology

The civil war has severely degraded Yemen’s capacity and infrastructure related to international trade and investment. The economy is largely cash-based. The limited financial system is dominated by the state, and the banking system is very fragile. Even before the current conflict, years of economic mismanagement and poor governance had led to chronic poverty and underdevelopment.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

RANK COUNTRY OVERALL CHANGE
1United Arab Emirates76.90.7
2Israel73.8-0.2
3Qatar72-0.3
4Bahrain69.93.6
5Saudi Arabia663.6
6Jordan64.6-1.4
7Oman64.61.0
8Kuwait64.10.9
9Morocco63.30.0
10Tunisia56.60.8
11Egypt55.71.7
12Lebanon51.4-0.3
13Algeria49.72.8
14Iran47.2-2.0


View all countries ›

Back to Top