Yemen Country Risk Rating

Yemen, has not seen improvement in its overall country risk rating of very-high. Yemen’s leadership is divided between the internationally recognized President Leadership Council (PLC) in the south, led by Chairman Rashad al-Alimi and primarily backed by Saudi Arabia, and the Houthi rebel government in the north and west. Prime Minister Salem bin Breik had formally submitted his resignation early this year, seeing his position filled by Foreign Minister Shaya Mohsen Zindani, following rising tensions between Saudi Arabia and the UAE. The Southern Transitional Council (STC) is a group backed by the UAE, seizing southern and eastern parts of Yemen in late 2025 which flared tensions with the strong Gulf power of Saudi Arabia. Rashad al-Alimi stated that Saudi-backed fighters had brought contested cities back under the Presidential Council’s control, followed by a further assertion of Saudi influence through a USD 500 mln pledge for development projects – prompting the UAE to withdraw its remaining forces. Political violence, political interference and legal & regulatory risk all remain at a very-high level, while many people had taken to the streets in southern Yemen to support the main separatist group, the STC. Yemen’s security landscape is further undermined by the Iran-backed Houthi movement, which has taken control over a large proportion of northern Yemen. The Houthi have demonstrated its missile and drone capabilities, but so far stayed out of the Iran war.

In the recent IMF April 2026 outlook, Yemen’s economy remains fragile but is expected to record its first positive growth since its deep recession in 2022, which followed a halt in the nation’s oil exports. The IMF foresee a 0.5% GDP growth rate in 2026 and 1.5% in 2027. Yemen remains highly exposed from its position in regards to the Iran war, with the Middle Eastern state’s reliance on its exports for essential goods. This dependence leaves Yemen vulnerable in regards to global commodity price volatility and ongoing supply disruptions. Inflationary pressures have therefore intensified with the IMF now forecasting a higher rate of 26.5% in 2026, followed by expectations of a downward trend in 2027 at 18.7%. Domestically, the relentless pressure from the Houthi’s has also heavily restricted the movement of aid into the nation. The U.N. state 4.8 mln people have been displaced internally, while nearly half-million children are in the need of treatment for severe malnutrition. Therefore, the risk of doing business remains very-high. Sovereign non-payment risk has improved to a medium-high rating, while exchange transfer remains high. The eventual rise in government revenues is expected to support imports, weak export growth and essential public services, somewhat easing domestic pressure.