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Commercial imports remain stable despite tensions in the Red Sea

  • Key Message Update
  • Yemen
  • January 2024
Commercial imports remain stable despite tensions in the Red Sea

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  • Key Messages
  • Key Messages
    • In highland areas, poor households have depleted their food stocks from the October to November cereal harvest. Meanwhile, income-earning opportunities remain limited during the agricultural off-season. In lowland areas, access to seasonal food and income is improving during the ongoing main harvest of cereals (December to February) and vegetable cultivation season (December to February). However, the pause in WFP general food  assistance in areas controlled by the Sana’a-based authorities (SBA) and poor economic conditions in areas controlled by the internationally recognized government (IRG) are offsetting positive seasonal factors. Overall, Crisis (IPC Phase 3) and Crisis! (IPC Phase 3!) outcomes remain widespread as millions contend with insufficient access to food and income. In SBA areas, a growing number are likely to be facing Emergency (IPC Phase 4) or worse outcomes given inability to compensate for the ongoing pause in WFP food assistance, particularly among poor households left without alternative sources of food and income.
    • Despite disruptions to shipping in the Red Sea due to the targeting of commercial vessels by the SBA, import flows into Yemen have remained stable. In January 2024, a total 365,961 MT of basic food commodities (wheat grain, wheat flour, rice, sugar, and cooking oil) entered via Yemen’s Red Sea ports. This is 10 percent higher than the 2021-2023 average for January and 16 percent higher than the monthly average of 2023. The trend of stability is likely to continue, with key informants reporting that at least 170,000 MT of food will arrive within the coming months. However, higher costs of freight and insurance will put upward pressure on prices of staple foods, fuel, and other imported commodities. To date, domestic price increases have not been observed given typical lag time due to the presence of stocks, particularly in SBA areas (where 399,000 MT of wheat grain was stocked as of January 31). However, prices are expected to begin increasing in the short term (1-3 months). 
    • In response to the ongoing SBA threat in the Red Sea, the US announced the re-designation of Ansarallah (the formal name of the SBA) as a Specially Designated Global Terrorist (SDGT) group (scheduled to take effect on February 16) and began conducting airstrikes on military targets in SBA areas. The SBA in turn responded by ordering the expulsion by late February of all US and UK nationals working for the UN and aid agencies (though the degree to which this directive will be enforced remains to be seen). Although these developments have stalled further peace negotiations, impacts on acute food insecurity in Yemen are likely to be limited overall, given that the current SDGT designation is less restrictive on commercial and humanitarian activities compared to the foreign terrorist organization (FTO) designation of 2021.1 Concern for impacts on acute food insecurity would be greater should the SBA impose additional restrictions on the humanitarian operating environment as further retaliatory measures. 
    • On January 21, the Aden-based Central Bank of Yemen (CBY) held a public foreign currency auction following a pause of operations with an unprecedented duration of more than two months.2 A total 40 million USD was auctioned, 10 million higher than in prior auctions. Even so, demand by traders was 40 percent higher than the total auction amount, likely largely associated with the approach of the holy month of Ramadan when food and non-food imports increase. Since then, no further auctions have been conducted, and the Aden-based rial has continued to depreciate at an accelerated rate since mid-January, losing around 6 percent of its value in the second half of the month. 
    • The recent foreign currency auction by the CBY-Aden was likely enabled by the final tranche of economic aid from the Kingdom of Saudi Arabia (KSA) released on January 16. However, with oil production and exports halted, this foreign support has been insufficient to make a meaningful difference to the IRG’s significant shortages of revenue. In addition to depreciation of the currency, revenue shortages are resulting in delays in payments of civil servant salaries and worsening provision of public services. For example, power outages of more than 8 hours per day were reported in Aden in January. Such severe shortages of electricity are atypical during winter, when demand for electricity is at seasonally low levels.

    Recommended citation: FEWS NET. Yemen Key Message Update January 2024: Commercial imports remain stable despite tensions in the Red Sea, 2024.

    1

    For more information on FEWS NET’s analysis of the anticipated impacts of the 2021 FTO designation on acute food insecurity (prior to the designation’s reversal in February 2021), see the "Events that Might Change the Outlook" section of FEWS NET's December 2020 Food Security Outlook Update report.

    2

    Auctions were previously held weekly, with some biweekly intervals.

    This Key Message Update provides a high-level analysis of current acute food insecurity conditions and any changes to FEWS NET's latest projection of acute food insecurity outcomes in the specified geography. Learn more here.

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