Years of war, disrupted revenue streams, and soaring inflation have pushed Yemen’s economy to the edge, according to the latest assessment of the International Monetary Fund (IMF) released in October 2025
The report, which paints a grim picture of Yemen’s macroeconomic outlook, warned that Yemen is facing an imminent economic collapse, with public debt now exceeding 100% of the country’s gross domestic product (GDP).
The warning comes amid deepening fiscal distress, prolonged conflict, and a fragmented institutional landscape that continues to undermine recovery efforts
The report also warned that without urgent reforms and international financial support, the country could face a full-scale fiscal collapse, further worsening humanitarian conditions for millions of Yemenis.
The IMF urged both the internationally recognized government and the Houthi rebels to prioritize fiscal discipline, unify monetary policy, and restore central banking functions. It also called on donors to increase aid flows and support stabilization programs that can help rebuild Yemen’s economic institutions.
Yemen’s economic crisis is compounded by a severe liquidity crunch, widespread poverty, and a fractured banking sector.
The World Bank and other international institutions have echoed similar concerns, warning that the country’s economic free fall could have long-term implications for regional stability.