Yemen and Analyzing the Macroeconomic Indicators
In 1994, the nation fell into a civil war against the north and south over differences in power sharing, much poverty in the south over north and breakdown in political cooperation. In 1997, a parliamentary election was held and won over by the General Peoples Congress but in 1998-1999, a militant Islamic group, the Aden-Abyan Islamic Army, threatened to overthrow the government and turn Yemen into an Islamic state. Although Aden fell on July, conflicts arose between the government and religious minority groups. Still, civil turmoil continues in the south. The militants strikes in Yemen strengthened the governments cooperation with the US in fighting terrorism yet, the state is fragile and unstable as it is regarded as a breeding ground to the famous al-Qaeda militants as well as intermittent violence from rebels (infoplease, 2007).
Yemen is attracting global concerns due to humanitarian crisis, deteriorating security and other political and social issues. The government then collaborated with different international organizations to aid it and macroeconomic situations were indicated.
Discussion
The macroeconomic indicators
Table 1 Economic Indicators in 2007-2009
from the CIA World Factbook Beginning of 2009 (Source FAO, 2009)
IndicatorsYear (Indicator Value)2007(est.)2008 (est.)2009 (est.) HYPERLINK httpwww.theodora.comwfbwfb2000definitions.html l GDPGDP- (purchasing power parity)54.33 billion56.07 billion58.2 billionGDP (real growth rate)3.503.23.80GDP (official exchange rate )15.07 billion27.56 billion26.24 billionGDP - composition by sector
agriculture
industry
services
12.40
42.2
45.4
12.4
40.9
46.7
9.7
39.3
51.1Labor force5.972 million6.316 million6.641 millionInflation rate (consumer prices)20.8010.703.6Industrial production growth rate 3.22.55.8GDP - Investment (gross fixed)17.40 19.10 19.9 GDP - Public debt29.2 28.1 39.6 Debt - external5.494 billion6.122 billion6.245 billionUnemployment rate35(2003 est.) HYPERLINK httpwww.theodora.comwfbwfb2000definitions.html l population_below_poverty_linePopulation below poverty line45.2 (2003 est.)
According to the Human Development Report of the United Nations Development Programme (UNDP), Yemen ranked 140th among 177 countries in Human Development Index (HDI) with per capita Gross Domestic Product (GDP) of 2,235 (at purchasing parity power) categorizing it as one of the least developed countries (FAO, 2009).
Over the last three years, Yemen s real growth rate (GDP) averaged to 3.5, ranking 42nd in comparison to the world. The GDP (purchasing power parity) data in US dollars in 2007-2009 was estimated at 54.33 billion, 56.07 billion, 58.2 billion, respectively, ranking 84th in the world (CIA World Factbook, 2010).
Its economic sector is dominated by the service sector, followed by industry and agriculture, while government service is 21 and transport is 13. Tourism is not dependable because of safety reasons, water shortage and limited infrastructure (FAO, 2009).
The country also poses serious problems in the future due to the diminishing oil reserve which is expected to deplete in 10-12 years on which the economy highly depends. Over the years, as shown in Table 1, the industry sector showed a significant decline.
The Yemen economy slightly increased as oil prices stabilized in 2007. It accounted for the 85 of export earnings and about 70 of government revenue. Due to depletion, the oil sector is expected to fall by some 7 but is deferred by the growth in non-oil sector (Spring, 2007). According to FAO (2009), decline in oil production and low prices is expected to broaden the fiscal deficit and limit government spending, made for about 50 by fuel subsidies (about 14.5t of GDP in 2008) and public sector wage bill. As shown in Table 1, a big increase in public debt is shown from 2008 to 2009.
The moderate development is also due to the sales of natural gas of the Yemen Liquefied Natural Gas (YLNG) with GDP growth forecast at 3.8. The external public debt then fell from 38 GDP to 22 GDP in 2008 standing at about 5.7 billion at the beginning of 2009 (FAO, 2009).
The inflation rate also declined according to Darem (2009) due to the decrease of food and beverage prices. This made the Central Bank of Yemen decrease their interest prices twice since January of 2009 hoping to contribute in increasing the supply of goods and services to attain stability in price levels.
Yemen has one of the highest population growth rates which greatly influence poverty. In the report of FAO (2009), currently, about 45 percent of population is below the age of 14, which has major social and economic implications, especially with respect of access to social services and employment. Also, human resource capacity is limited because of low literacy and enrollment rate as well as gender inequalities. This is a major concern since 65 of women compared to only 27 of men are illiterate, specially, these are the major factors that would increase the rate of unemployment in the following years. Yemen ranked 15th compared to the world in the latest report of the CIA World Factbook (2010).
Another resource facing depletion is the groundwater resource as table water level is falling by some two meters per year as the only source for drinking and irrigation (FAO, 2009).
Conclusion
It is found that Yemens economy is moderately growing yet very unstable because the global recession is greatly affecting sudden change in oil prices. Yemens economic performance is still inadequate for its people. Further economic increase is critical due to oil reserve depletion but growth forecast due to natural gas has a good potential. Also, the country should address issues in political and social instability. Other major concerns like poverty, education and gender inequalities should focus attention on improving its unemployment rate and developing sustainability.