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Yemen Inflation Predicted to Hit 500 Percent

Yemen Inflation Predicted to Hit 500 Percent

Sunday, 5 November, 2017 - 12:30
A boy searches for food among litter on a street in Sana’a. (Reuters)

The purchasing power across Yemen is at its worst against prices that rose up by 500 percent, announced the Institute of Financial and Economic Information for Studies.

This has brought about a violent wave of inflation caused most notably by the deterioration of the Yemeni riyal, double taxation and imposing of royalties on imported, domestic and smuggled goods.

According to the head of the Institute of Financial and Economic Information for Studies Ahmed Al-Shamakh, prices in Yemen varied in proportion with the inflation, with an increase of 500 percent in basic commodities, such as food and medicine.

He attributed the reasons for this significant spike to customs duplication, and the imposition of royalties by local authorities throughout Yemen on national, imported and even smuggled goods.

He pointed out that purchasing power in Yemen has fallen to its lowest levels recently, because of the widening gap between public and private sectors, which naturally led to unemployment and poverty hitting 85 percent.

He said that "the official economy in Yemen has gone, and the surface of the hidden economy (the black market) has been scratched.”

“What controls the economy today is the oil derivatives market, the exchange rate market,” he added while describing the current economy as “immoral.”

Shamakh predicted that the exchange rate would reach 500 Yemeni riyals for the dollar in the next two months if there were no steps taken by de facto authorities in Sana'a and the legitimate government to stop the deterioration in the macro economy.

He stressed the importance of finding solutions to save the economic deterioration and the Yemeni currency by resuming the export of oil abroad under the supervision of the United Nations, and for oil derivatives import returns to be given to the public sector and not to the private sector, which has become characterized by chaos and non-regulation.

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