Economy (Yemen)
===============


     Overview:
         Whereas the northern city Sanaa is the political capital of a united Yemen,
         the southern city Aden, with its refinery and port facilities, is the
         economic and commercial capital. Future economic development depends heavily
         on Western-assisted development of promising oil resources. South Yemen's
         willingness to merge stemmed partly from the steady decline in Soviet
         economic support.
     Overview:
       North:
         The low level of domestic industry and agriculture have made northern Yemen
         dependent on imports for virtually all of its essential needs. Large trade
         deficits have been made up for by remittances from Yemenis working abroad
         and foreign aid. Once self-sufficient in food production, northern Yemen has
         become a major importer. Land once used for export crops - cotton, fruit,
         and vegetables - has been turned over to growing qat, a mildly narcotic
         shrub chewed by Yemenis which has no significant export market. Oil export
         revenues started flowing in late 1987 and boosted 1988 earnings by about
         $800 million.
       South:
         This has been one of the poorest Arab countries, with a per capita GNP of
         about $500. A shortage of natural resources, a widely dispersed population,
         and an arid climate have made economic development difficult. The economy
         has grown at an average annual rate of only 2-3% since the mid-1970s. The
         economy had been organized along socialist lines, dominated by the public
         sector. Economic growth has been constrained by a lack of incentives, partly
         stemming from centralized control over production decisions, investment
         allocation, and import choices.
     GDP:
         exchange rate conversion - $5.3 billion, per capita $545; real growth rate
         NA% (1990 est.)
     Inflation rate (consumer prices):
       North:
         16.9% (1988)
       South:
         0% (1989)
     Unemployment rate:
       North:
         13% (1986)
       South:
         NA%
     Budget:
       North:
         revenues $1.4 billion; expenditures $2.2 billion, including capital
         expenditures of $590 million (1988 est.)
       South:
         revenues and grants $435 million; expenditures $1.0 billion, including
         capital expenditure of $460 million (1988 est.)
     Exports:
       North:
         $606 million (f.o.b., 1989)
       commodities:
         crude oil, cotton, coffee, hides, vegetables
       partners:
         FRG 29%, US 26%, Netherlands 12%
       South:
         $113.8 million (f.o.b., 1989 est.)
       commodities:
         cotton, hides, skins, dried and salted fish