Macroeconomic Forecast Yemen

While inflationary pressure is set to remain pronounced in Yemen over the coming quarters, we expect the headline print to moderate in 2012 compared with 2011. We are forecasting average inflation of 19.1% y-o-y in 2011, falling to 16.7% in 2012. That said, we highlight a major upside risk to this projection in the growing potential for the country's precarious external position to translate into a forced devaluation of the rial.

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