Impact of COVID-19 on the Yemeni Economy

There has been an unprecedented decline in the flow of remittances to Yemen – a vital source of money for millions – as a result of the COVID-19 pandemic. A Social Accounting Matrix (SAM) multiplier model of Yemen’s economy was used to estimate the impact of lower remittances on economic sectors and employment, food systems, and household incomes. Some of the key findings from this modeling exercise are:

• National GDP is estimated to have fallen by 8.5 percent.
• Agriculture was hardest hit, seeing an estimated drop in output of more than 9 percent. Food systems in Yemen are estimated to have experienced a reduction in output by almost 10 percent.
• Employment losses were estimated at 8 percent, mainly due to job losses in services, followed by agriculture.
• Household income fell on average by 12.5 percent, mainly driven by lower remittances but also as a result of lower factor earnings in the service sector and the agri-food system.

Options for local recovery measures are limited. Nonetheless, Saudi Arabia and other Gulf countries could enact concrete policies to help Yemeni migrant workers survive the adverse impacts of COVID-19 in their labor markets.