Strife-Torn Yemen Tops The World's Worst Economies
Source : Forbes
Twice within a month
this spring, militants knocked out the pipeline leading to a $4.5 billion liquefied
natural gas plant built by France’s Totalin Yemen. Weeks later Total was still negotiating with local tribes to
get its crews in to repair the pipeline and restart the 6.7 million-ton per
year LNG plant, a key component in Yemen’s efforts to supply more energy to its
citizens and diversify its economy away from crude oil.
Total needed to obtain
signed agreements “with more than a dozen sub-tribes and splinter groups”
before it could attempt repairs, an industry source told the International Oil
Such is life in Yemen
today, as the oil-rich nation struggles with rebellious tribes, a resilient al
Qaeda franchise, and U.S. drones in the air that inspire bloody acts of
retaliation on the ground. The turmoil has cost Yemen more than a quarter of its
oil production and helped place it atop this year’s list of The World’s Worst
Second on the list is
Syria, a similarly strife-torn Arab nation whose economy shrank by at least 6%
last year as dictator Bashar al-Assad drew stiff international sanctions over
his bloody military attacks on his own citizens. Third is Sudan, a perennial
contender for Worst Economy honors. New to the list this year is Pakistan,
whose economy has suffered from a poisonous combination of stagnant per-capita
income and high inflation.
To construct the list,
we pulled a broad range of economic statistics from the International Monetary
Fund, supplementing with other sources including the CIA World Factbook, the
U.S. State Department and various development organizations. This list is not
exhaustive; North Korea is clearly the world’s worst economy but with no
reliable statistics we can’t compare it with the rest of the world.
We used three-year
averages for per-capita income and GDP, to smooth out temporary changes. Countries
with low per-capita incomes, growing populations and high inflation do the
worst by this measure, and thus Africa tends to contribute more than its share
of weak economies. A country’s natural wealth has little to do with whether it
will land on the World’s Worst Economies list; resource-rich countries like
Yemen and Chad make it solely because of their own mismanagement.
With per-capita income
of $1,418 and an estimated adult illiteracy rate of 45%, Yemen ranks among the
poorest countries on earth. This despite the fact that Yemen has 3 billion
barrels of oil, providing about a quarter of the country’s $63 billion GDP and
70% of government revenues. Attacks by al Qaeda and militant tribes helped trim
oil production by 125,000 barrels a day last year amid widespread violence that
also led to the resignation of longtime leader Ali Abdullah Saleh.
“In a sense, what Yemen has gone through is a
perfect storm,” said Barbara Bodine, a professor at Princeton University’s
Woodrow Wilson School of International Affairs and U.S. ambassador to Yemen
from 1997 to 2001. “Political turmoil has been devastating to Yemen, as it was
for Egypt and Libya, but you’re talking about a country that was bouncing along
the bottom already.”
Yemen has some
advantages over neighbors like Syria, Libya and Afghanistan, Bodine said,
including a relatively cohesive population that is even split between the
Shaf’I and Zaydi sects of Islam. The tribes can be a problem for foreign
investors like Total, because they demand firm commitments of employment for
their members in exchange for safety. But it’s only a difference in degree, not
kind, from the pressure some cities put on companies like Wal-Mart before they
are allowed to expand.
“It’s a little less
polished in Yemen,” she said.
The country has possibly
the world’s best natural harbor at Aden, a deep anchorage within the remnants
of an ancient volcano. But Yemen has difficulty attracting investment because
of its reputation for danger – enhanced by the U.S.S. Cole bombing in Aden
harbor in 2000. Meanwhile UNICEF and OXFAM have warned of a growing crisis as
nearly 10 million people lack sufficient food and 40% are below the poverty
line. With a youthful population growing at more than 2% a year and widespread
illiteracy, Yemen faces economic catastrophe if it doesn’t improve its
educational system and diversify its economy, now largely based on subsistence
Syria, in second place,
is in such turmoil that the IMF doesn’t even supply up-to-date statistics. We
examined other sources including IHS Global Insight, which recently forecast
another 6% contraction in Syria’s economy for 2012 as the embargo on Syrian oil
exports that was put in place in November 2011 continues to hurt GDP.
Inflation has climbed
past 20%, meanwhile, as the country struggles with import restrictions and a
severe drought that has cut domestic food production.
“The pace of food-price appreciation
accelerated dramatically, rising 39.3% year over year, up even more from the
already worrisome pace of 27.1% seen in February,” IHS said.
Coming in third is
Sudan, a perennial member of our list of the World’s Most Corrupt Countries.
The North African nation joined the World’s Worst Economies this year after
losing its oil-rich southern provinces, which supplied three-quarters of its
oil production. South Sudan seceded from the north a year ago after a long
civil war. Now Sudan has a per-capita GDP of $1,400, ranking it 136th among the
184 countries Forbes surveyed. (The richest country was Qatar, with per-capita
GDP of $103,000, while the U.S. came in 12th at $49,600.)
The next two countries
are Swaziland, making a repeat appearance; and Pakistan, whose per-capita GDP
averaged just $1,282 over the past three years as inflation roared at close to
13%. Pakistan’s GDP has been growing at a little more than 3% a year, while its
population, estimated by the World Bank at 176 million, continues to expand
at1.8% a year. The CIA World Factbook
notes that Pakistan’s poverty rate is close to 50% and the country has
difficulty attracting foreign investment. One bright spot: the $1 billion or so
expats send to their relatives each year.
Next comes Jamaica,
still struggling with the effects of the global financial crisis on its
tourism-driven economy and declining prices for its bauxite exports. Jamaica’s
per-capita GDP of $5,600 puts it firmly in the middle of the world’s nations
but it shows up on our list because the economy contracted in 2010 and still
shows anemic growth and a high current-account deficit. The IMF predicts
Jamaica’s economy will grow at less than 2% a year through 2017, while the
government struggles with debt that exceeds 120% of GDP. Jamaica’s dollar has
fallen 20% in the last three years to 1.13 U.S. cents.