Growth Surprises On The Upside

Growth in Yemen was a relatively robust 4.6% in 2005 according to the latest set of figures released by the Central Bank of Yemen. This was largely on the back of higher oil receipts and strong non-oil sector growth, boosted by increased government spending. As a result, we have revised our growth forecasts for 2006, from 4.5% to 4.75%, given our expectation of non-oil sector growth of 5.71%. While we expect Yemen's economy to expand by around 4% into 2010, downside risks to our forecasts stem largely from a faster and greater tightening of fiscal policy as oil revenues decline.

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