Things that could go right in 2009 [Archives:2009/1228/Viewpoint]

January 26 2009

Nadia Al-Saqqaf
Despite the fact that year 2009 has started off on a sad note regionally, i.e. the attacks against Gaza, 2009 might as well be a good year for Yemen provided that a few issues are resolved the right way.

There are three main factors that dominate the country's political sphere. There are the northern rebellion of the Houthis, the southern movement asking for separation, and the opposition parties wanting to simply overturn the ruling system.

Yet in each of these three issues there is a potential benefit that is very possible to achieve. For one, the actual war in the north has ended in July last year, so basically this is a year for reconstruction and mending broken links. The committee for reconstructing Sa'ada, chaired by the governor, made a list of estimated damages in December last year, and budgets have been allocated. Regardless of how this list is received by some Houthis who are still holding grudges, reconstruction is always a positive thing. In fact, seeing homes being rebuilt and children re-enrolled in schools is very likely to ease the tensions to a great extent.

The undercover negotiations and international pressure on the Yemeni government are likely to postpone the parliamentary elections due on April 27 this year. The fact that Parliament has been suspending its municipal polls for four years now is a strong indication that this option is more likely than entering the elections under vague circumstances. The opposition coalition, or the Joint Meeting Parties (JMP), has not given a clear cut decision whether they will really boycott the elections despite the fact that they boycotted the registration process. This gives hope that a compromise can be reached, provided there is time to work it out with the delay of elections.

And finally the secessionist movement, which has been aided by the deteriorating economic conditions of the country as a whole, is probably going to ease by mid 2009 as the political environment will be encouraging dialogue. By then I suppose that the JMP would have come to terms with the ruling party and reconstruction in the north would be going smoothly.

On the economic level, by May 2009, Yemen will have a great new source of income as the Yemeni Liquid Natural Gas Company would start exporting natural gas. However, oil prices worldwide have gone down. As a result, Yemen is expecting a fiscal deficit averaging 12.2 percent of the GDP in 2009-10 according to the Economist Intelligence Unit, forcing Yemen to seek more foreign donor support. On the bright side, Britain, and the EU, which are the largest donors to Yemen, have already committed to increasing their support to Yemen's economy.

All these factors together are likely to increase the average GDP growth by 5.2 percent in 2009-10. Moreover, also according to the Economist Intelligence Unit, the average inflation in 2009 is expected to decline rapidly, to 7.7 percent, owing to the sharp drop in global commodity prices forecasted for 2009. This means that the global fall in prices will be relatively reflected in Yemen.

Finally, for those who are earning in dollars, this year will be a good year as the Yemeni Riyal's value will have to depreciate for a few months until the US dollar's value is strengthened in Yemen in order to decrease inflation levels.