Yemen Market Watch Report, Issue No. 9 (January 2017)
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Availability of food and fuel commodities further deteriorated in January 2017 due to reportedly reduced imports and hoarding of essential commodities by opportunistic traders in anticipation of increased prices.
In-country stocks of wheat and sugar expected to run out by end of April 2017 while rice and vegetable oil merely cover one month national requirement.
Prices of food and fuel commodities increased in January 2017, and continued to be significantly higher than the precrisis levels.
The cost of the minimum food basket rose in January by nearly 4% compared to December, and 26% higher than in the pre-crisis period.
According to Alert for Price Spikes (ALPS) methodology, in January 2017, normal situation prevailed for vegetable oil, while wheat flour was on stress level and red beans on alert status and sugar continued to be at crisis level. The ALPS indicator for the cost of the minimum food basket still remain at normal condition.
Macroeconomic Situation
Yemen’s Gross Domestic Product (GDP) declined by 32.9% between 2014 and 2015, and according to MoPIC’s projection the GDP might have shrunk further by about 12.8% in 2016. The ongoing conflict which adversely affected Yemen’s infrastructure, public and private enterprises, including Islamic and commercial banks, disrupted economic activities, such as oil and gas production and exportation, and caused a suspension in donor development support programs and all forced the government to shut down its public service programs, leaving many Yeminis without welfare assistance as well as disruption of salaries that led to rising needs for humanitarian assistance.
An estimated 18.8 million people require some kind of assistance or protection in order to meet their basic needs, including 10.3 million who acutely need aid to save or sustain their lives. This represents an increase of almost 20 per cent since late 2014 and is driven by growing needs in all sectors after nearly two years of conflict.
Imports of essential commodities continue to suffer from lack of foreign currencies and the continued depreciation of Yemen Riyal (YER) against US Dollar (USD) – with the average exchange rate in January 2017 reaching as high as YER330/USD in parallel markets compared to the current official rate of YER250/USD.