Introduction

This monthly economic bulletin is issued by the Studies and Economic Media Center (SEMC) to monitor the most significant economic developments in Yemen and analyses the political and administrative factors affecting the trajectory of the economy and their implications for citizens’ livelihoods. The bulletin regularly tracks key economic news and indicators, particularly exchange-rate movements and relevant banking and government decisions, as well as developments in the private sector and violations affecting businesses.

The bulletin also provides professional analytical insights that link economic indicators to their broader contexts, drawing on regular monitoring and documentation. Its objective is to provide an accurate and objective picture that can serve as a reference for researchers, policymakers, and those interested in Yemen’s economic affairs.

Analysis of the Economic Landscape in August 2026

Yemen’s economic landscape during August 2026 was marked by an escalation in the military conflict and its repercussions for the economy. Amid continued institutional fragmentation, limited public resources, and declining household purchasing power despite relative exchange-rate stability, there were insufficient signs of economic recovery. Instead, the gap widened between limited monetary stability and the continued deterioration in productive activity and living conditions.

The military escalation along the western coast of Taiz was among the most significant economic developments during the month, following Houthi attacks on Mocha Port with missiles and drones, which resulted in the suspension of commercial and maritime activity. According to the port director, the reported toll had reached approximately 35 military strikes by the end of August, killing 16 people and injuring 22 others. Initial rehabilitation needs, including the construction of a new berth, were estimated at approximately $79 million. The repercussions extend beyond direct material losses to include disruptions to investments linked to port development, loss of employment and income opportunities, increased transportation risks, and reduced logistical alternatives available to trade.

Economically, the Yemeni Rial maintained relative stability in both the Aden and Sana’a markets, but this stability existed within two separate monetary systems. According to the bulletin’s indicators, the average US dollar exchange rate stood at approximately YER 1,562 in Aden, compared with YER 533 in Sana’a. This disparity reflects the depth of monetary fragmentation and differences in monetary policies and restrictions between Yemen’ IRG- and Houthi-controlled areas, resulting in additional costs for transfers, settlements, and commercial transactions across areas of control.

In Yemen’ IRG-controlled areas, policies focused on strengthening banking supervision and developing financial infrastructure. August saw the establishment of the Yemeni Payments and Clearing Company (YPCC), the launch of a credit-default registry, and regulatory measures against exchange businesses, alongside preparations for the operation of the National Committee for Regulating and Financing Imports’ electronic platform. These measures represent a gradual shift toward regulating financial transactions and improving risk management and transparency. However, their economic impact will depend on the effective operation of these systems, broader participation by financial institutions, lower transaction costs, and citizens’ ability to access them.

In the same context, the IRG undertook public-finance reform measures, including reviewing the operations of customs points and closing illegal ones in order to strengthen control over revenues and combat smuggling. Turning these measures into sustainable fiscal gains, however, will require harmonizing collection procedures, reduce the multiplicity of fees, and strengthen transparency and accountability.

Meanwhile, commercial activity in Houthi-controlled areas continued to face pressure, with declining demand, rising operating and transportation costs, and increasing burdens imposed on businesses. A decision to raise customs duties and sales tax on imported cement, effective 26 August, added potential pressure on the construction sector. Although the measure was justified on the grounds of protecting domestic production, its net impact will depend on the ability of local factories to provide sufficient alternatives at competitive prices. Otherwise, the increase could translate into higher construction costs and fewer employment opportunities.

In IRG-controlled areas, the household LPG crisis highlighted the fragility of the energy system, as maintenance activities, transportation disruptions, smuggling, and distribution failures combined to reduce supplies and increase the cost of living. At the same time, the arrival of equipment for Aden’s emergency power plant, with a capacity of 100 megawatts, represents a potential opportunity to alleviate the electricity crisis if the facility can be brought into operation within a short period.

These developments coincided with a severe funding crisis. On 13 August, the UN reported that the humanitarian response plan received only 13% of the funding required.

Outlook

August data indicate that Yemen’s economy is entering a difficult phase amid an escalation in the military conflict and the repercussions of the regional war between the United States and Israel on the one hand and Iran on the other. Two potential trajectories can be identified.

Scenario One: Escalation of the Military Conflict and Worsening Economic Disruptions

This scenario assumes continued attacks on ports and economic infrastructure, an expansion of ground and maritime confrontations, stalled political efforts, and rising regional tensions.

Under this scenario, severe displacement would increase, while shipping and insurance costs would rise and supply chains would be disrupted, increasing the cost of imported food, fuel, and production inputs.

With public revenues remaining limited, the financing gap could widen as security and emergency expenditures increase while commercial activity and customs collection decline. This could affect the regular payment of salaries as well as funding for electricity and essential services.

At the humanitarian level, higher food and fuel prices, declining employment opportunities, and new waves of displacement would expand food and health needs and increase the risk of malnutrition, particularly among children, pregnant and breastfeeding women, and internally displaced persons. This would be especially challenging as additional needs could exceed the capacity of humanitarian organizations to respond amid limited funding.

Scenario Two: Renewed De-escalation and Containment of Economic Deterioration

This scenario assumes that diplomatic efforts succeed in reducing military escalation, restoring greater maritime security, and creating an environment conducive to the resumption of commercial activities and improved humanitarian access.

In such circumstances, lower security risks could help stabilize transportation and insurance costs and improve the flow of imports, easing inflationary pressures and supporting stability in the foreign-exchange market.

An improved security environment would also provide an opportunity to accelerate institutional reforms, particularly the operation of payment and clearing systems and the regulation of import financing, strengthen dialogue between the government and the private sector, and restore confidence in investment and commercial activities.

Key News and Indicators During August 2026

First: Measures by the Presidential Leadership Council (PLC), the Yemen’ IRG and the Aden-CBY, and Related Developments

The PLC, the Yemen’ IRG and Its Institutions

• Chairman of the PLC Dr. Rashad Al-Alimi directed the closure of all border crossings and ports operating outside the legal framework and called for a reassessment of the status of operational entry points. During a meeting with the Supreme Committee for Combating Smuggling, attended by the Yemeni Prime Minister, who chairs the committee, he stressed the need to replace officials proven to have been negligent or involved in smuggling, refer those involved to the Public Prosecution, and halt any interventions, exemptions, or exceptional reductions that fall outside the law. He also stressed the importance of activating a unified list of materials, equipment, and vehicles prohibited from being transported to Houthi-controlled areas, and tightening controls on the smuggling of currency, gold, and minerals.
• Chairman of the PLC Dr. Rashad Al-Alimi described the Houthi group’s missile and drone attacks on Mocha Port in Taiz Governorate as a systematic war targeting the Yemeni people’s assets and economic gateways. He made the remarks during a meeting with Neil Hop, Chargé d’Affaires of the US Embassy in Yemen, in Riyadh.
• The Ministerial Committee for Institutional Reform held its first meeting in Aden, chaired by Yemeni Prime Minister Dr. Shaea Al-Zindani, to discuss its work plan and mechanisms for implementing the state-institution reform and modernization Programme. The meeting examined the priorities of the first phase, including a review of government structures, mandates, legislation, resources, and systems. It emphasized that the Constitution and the law should serve as the reference framework for reform and that the process should move from diagnosing institutional deficiencies to addressing them in practice according to clear standards and indicators.
• The Supreme Committee for Tenders and Auctions in Aden, chaired by Jamal Al-Aqeel, approved the draft financial thresholds and decided to submit it to the Yemeni Cabinet to complete the legal and regulatory procedures. The meeting reviewed the main components and technical and legal aspects of the draft, including sources of inflation, its legal basis, and the levels of financial thresholds and related authorities. The objective is to enhance the efficiency of public spending, improve transparency and governance in the implementation of government projects, ensure the optimal use of public resources, respond to economic changes, and improve the efficiency of the tendering and auction system.
• The Yemen’ IRG in Aden introduced changes to the leadership of TeleYemen, the Yemeni International Telecommunications Company, including the appointment of a chief executive officer, a deputy chief executive officer, and a chief financial officer. The changes form part of a plan to restructure the company, improve its technical, administrative, and financial efficiency, and increase state revenues.
• The Yemen’ IRG resumed publication of the Official Gazette of the Republic of Yemen from the temporary capital, Aden, after a suspension lasting more than 11 years. The move aims to provide an official and reliable reference for publishing government laws, decisions, and regulations.

Aden-CBY  and the National Committee for Regulating and Financing Imports in Aden

• Aden-CBY  Governor Ahmed Ghaleb inaugurated the founding assembly of the Yemeni Payments and Clearing Company (YPCC) in the presence of Minister of Industry and Trade Mohammed Al-Ashwal, representatives of the United Nations Development Programme (UNDP), banks, and financial institutions. The establishment of the company forms part of the Aden-CBY’s efforts to develop national infrastructure for payment, clearing, and settlement systems, strengthen financial inclusion, and promote the transition toward digital financial services. The assembly approved the company’s founding agreement and articles of association and elected its first board of directors, marking a step toward modernizing the national payments system, improving the efficiency of financial transactions, and expanding the use of electronic payment methods in support of financial stability and economic growth. In an exclusive statement to the Monitoring Unit of the SEMC, the Aden-CBY Governor said that the Yemeni Payments and Clearing Company is financed with approximately $23 million from the World Bank through the United Nations Development Programme (UNDP), with ownership distributed between the Aden-CBY (45%) and banks (55%).
• The Aden-CBY launched the Credit-Default Registry, aimed at establishing a unified digital platform for exchanging information on defaulting customers among banks. The system is intended to help reduce credit risks, protect depositors’ funds, and strengthen the soundness and stability of the banking sector.
• Aden-CBY  Governor Ahmed Ghaleb signed a memorandum of understanding with the United Nations Development Programme (UNDP) in the temporary capital, Aden, to strengthen cooperation in financial technology and digital innovation. The agreement includes establishing a FinTech Lab at the Central Bank’s headquarters to serve as a specialized platform for developing and testing innovative financial solutions. The memorandum aims to support the Central Bank in keeping pace with technological developments, expanding financial inclusion, and providing secure and accessible digital financial services. It also seeks to strengthen the capacities of national personnel and develop regulatory and supervisory frameworks in ways that contribute to the stability and growth of the banking sector and the national economy.
• During August, the Aden-CBY  took a series of regulatory measures against non-compliant exchange businesses and companies. These included suspending the licences of and closing the premises of nine companies, businesses, and remittance agents, pursuant to Decisions Nos. (13), (14), and (15) of 2026, issued by Governor Ahmed Ghaleb on the basis of field-inspection reports submitted by the Banking Supervision Sector. The measures form part of the Central Bank’s efforts to strengthen regulatory oversight of the exchange sector and combat financial violations.
• The National Committee for Regulating and Financing Imports launched the first phase of a training programme on the committee’s electronic platform, targeting the team supporting the executive team, in cooperation with the company that developed the platform. The programme forms part of ongoing preparations for the platform’s actual operation and aims to improve users’ capacity to work with it effectively. The first phase focused on introducing the platform’s interfaces, the nature of user accounts and their permissions, and mechanisms for using its various functions. The programme is intended to standardize procedures, improve operational efficiency, and ensure the technical and operational readiness of the teams concerned.