Aden -- Yemen’s economy is facing intensifying economic pressures as growth continues to decline and inflation surges, according to the World Bank’s latest Yemen Economic Monitor released in November 2025.

The report, titled “Navigating Increased Hardship and Growing Economic Fragmentation,” reveals that real GDP is projected to contract by 1.5% in 2025, marking another year of economic deterioration. The downturn is attributed to a continued blockade on oil exports, shrinking international aid, and deepening institutional divisions between rival authorities.

In areas controlled by the Internationally Recognized Government (IRG), inflation has severely eroded household purchasing power. As of mid-2025, the cost of a basic food basket had risen by 26% compared to the previous year, driven by the sharp depreciation of the Yemeni rial, which hit a record low of YER 2,905 per US dollar on the Aden market in July.

The World Bank warns that these trends are likely to exacerbate food insecurity and deepen humanitarian needs, especially in conflict-affected regions. The report also highlights the growing fragmentation of Yemen’s economic institutions, which undermines efforts to stabilize the currency and coordinate fiscal policy.

Despite limited stabilization measures that temporarily strengthened the rial, the broader outlook remains bleak. The Bank calls for urgent reforms, improved coordination between economic authorities, and increased international support to prevent further deterioration.

The findings underscore the fragile state of Yemen’s economy, which continues to suffer from years of conflict, disrupted trade, and weakened governance structures. Without meaningful intervention, the report cautions, millions of Yemenis will remain vulnerable to poverty, hunger, and economic displacement.