ABSTRACT

The economic and political prospects of the Yemen Arab Republic (YAR) in late 1986 closely corresponded to forecasts made at midyear. Both domains were mixes of pluses and minuses, with the former outweighing the latter by a good margin. In the second half of 1986, the near-term economic situation worsened by about as much as longer-term prospects became more clearly positive. Indeed, economic fundamentals looked as grim by mid-1986 as they had in 1982-1983, and they promised to remain so throughout 1987. The government announced in mid-July the adoption of controls on moneychangers in an effort to end the black-market speculation in dollars that had sharply depressed the value of the Yemeni rial, especially since the beginning of 1986. Current economic difficulties notwithstanding, major and ongoing development activities proceeded apace during the second half of 1986.