Economic balanceYemen can’t depend on oil: study [Archives:2005/807/Business & Economy]
A recent economic study has warned against dangers of the government's dependence on oil, and only oil, for its economy.
The study, which discussed reasons why Yemen has virtually no non-oil exports in Yemen, warns Yemen's economy is vulnerable due to fluctuation in oil prices, and how that reflects on the country's share of foreign currency, its trade balance, and it general economic relationship with the outside world.
The study noted that oil exports reached an export proportion of 66.8 per cnet in 2000, while they registered 90.4 per cent in 2004.
Trade sources believe that these rates of non-oil commodities in the period 1998-2004 as dangerous indicators, as they reflect not only weakness of non-oil exports, but structural failures in external trade and in construction of Yemen's economy.
The study noted that agriculture production last year reached 2 per cent of the total sectors of exportation, besides the fish wealth production sector, which, despite being a promising sector, is still low in aspects of volume.
Also, the proportion of the private sector exports to its imports, as compared to what is happening in the public sector of oil and its products, is considered very little. This situation does not reflect any progress in production levels of the private sector.
The study has also found for the year 2003, the more important countries representing partners of exportation for Yemeni oil are China, Thailand, India, South Korea and Singapore. The study found that oil exports of those countries reached at 99.1% of total exports.
Promising markets for non-oil exports are Arab countries such as Saudi Arabia, Emirates, Egypt, Jordan Djibouti and countries of Horn of Africa.
The study has called on the Yemeni government to replace more imports with local goods and revising the country's policy regarding the strategic structure for development of local exports.
Economists see that maintaining the program of economic, financial and administrative reforms and restructuring as a partial solution. There are other alternatives. More important are boosting investments in mineral wealth, diversity of sources of national income and pushing forward the process of comprehensive economic and social development.
The council of ministers recently had in its periodic meeting to give directives to ministries of industry and trade, the fish wealth, oil and minerals, culture and tourism and agriculture and irrigation.
The question is, will the concerned ministries, especially oil and mineral and trade and industry, include in their programs the successful methods for the investment of mineral wealth which Yemen possesses such an abundance of?