A number of economic researchers, representatives of international and local development organizations, and media professionals have called on the Yemeni government to swiftly form an emergency committee to mitigate the repercussions of the ongoing U.S.–Israeli Iranian war in the region. This came during a discussion webinar organized today by the Studies and Economic Media Center (SEMC) on the impact of regional escalation and conflict on Yemen’s economy, with the participation of more than 70 specialists and interested stakeholders.
The Deputy Governor of the Aden-CBY, Mansour Rajeh, warned of the consequences of a prolonged war on the Yemeni economy, noting that the most significant risks include rising fuel prices and a doubling of shipping and maritime insurance costs. He explained that the escalation would directly affect the country’s foreign currency resources, especially as remittances from expatriates in Gulf countries represent the primary source, covering 70% to 80% of foreign currency needs.
Rajeh also pointed out that declining incomes and worsening living conditions would further exacerbate the crisis, particularly as global attention and donor priorities shift toward other crises, potentially weakening Yemen’s chances of receiving external support. He stressed the importance of rationalizing imports, temporarily suspending the import of certain non-essential goods, building strategic reserves of essential commodities, and directing limited foreign currency resources toward food, medicine, and fuel.
For his part, the Deputy Minister for Foreign Trade at the Ministry of Industry and Trade, Mohammed Al-Hamidi, stated that the current impact of the war on the Yemeni market remains relatively limited. He explained that the market is already experiencing a state of “inflation and stagnation,” which reduces the likelihood of significant price increases.
He noted relative stability in supply chains, despite a slight increase in shipping and insurance costs, highlighting that the private sector has managed to maintain the flow of goods and prevent shortages or monopolistic practices under challenging conditions. He added that Yemeni private sector has built trust with international suppliers, helping stabilize retail markets and ensure the availability of essential goods.
He further explained that price increases observed in the markets, ranging between 15% and 20%, are driven more by panic and expectations than by actual impacts, noting that the private sector has played a role in absorbing these increases. He also warned that prolonged escalation could significantly affect small businesses and investments.
In a written intervention, the Deputy Minister of Transport, Nasser Sharif, highlighted the ministry’s role in managing risks in the transport sector and ensuring the continuity of supplies by regulating shipping routes, enhancing regional coordination, and treating the sector as a pillar of economic security under various escalation or de-escalation scenarios.
Meanwhile, the Chairman of the SEMC, Mustafa Nasr, reviewed key findings from a paper prepared by the SEMC on the war’s repercussions. He explained that the impacts follow a chain reaction starting with rising energy and fuel prices, extending through disruptions in maritime shipping and supply chains, and ultimately affecting commodity prices, import costs, and exchange rates. He noted a significant increase in shipping costs, with container prices rising from around $3,000 to $5,000, in addition to extra costs associated with war risks, placing additional burdens on importers.
Nasr added that estimates suggest commodity prices could rise by 15% to 35% if the escalation remains at its current level and could increase further if the conflict expands to include the Bab al-Mandab Strait, due to disruptions in maritime traffic and supply chains.
Participants concluded by emphasizing the importance of a unified vision between the IRG of Yemen and the private sector to address potential scenarios, warning against the militarization of Yemeni ports or the involvement of the Bab al-Mandab Strait in the conflict, given the serious consequences this could have on citizens’ livelihoods.
They also stressed the need to strengthen coordination with the banking sector to maintain the stability of the Yemeni rial amid expected pressures on the currency in the coming period.