The Great Financial Crisis of 2008 sent shockwaves across the entire world. No country, nation, or region was left unscathed, and that includes Saudi Arabia and Yemen.
Many Middle Eastern countries’ economies rely heavily on international oil and allowed the region to go through most of the early 2000s with strong economic growth and prosperity. However, countries’ growth was not perfect. Saudi Arabia’s economy was growing at a steady pace as they gained more and more of the oil market through the early 2000s. In Dr. Farah Naaz Gauri’s journal article he explains Saudi Arabia’s oil success by saying, “Saudi Arabia has the largest proven crude oil reserve in the world at 266.7 billion barrels, representing 57% of the GCC reserve, 29% of the OPEC and almost 20% of the world total reserve. It ranks as the largest producer as well as exporter of petroleum in the world and play a leading role in the OPEC, producing 28% of the total OPEC oil production” (Naaz Gauri, 2012)
Despite the country’s great economic success brought on by their oil industry, the 2008 Global Financial Crisis hit the region hard in terms of oil prices, causing countries like Saudi Arabia to reevaluate their economy and safeguards. As the Arab News reflects on the Great Financial Crisis of 2008, they include in their article the following statement: “But the global economy was feeling the shock, and with it the Middle East, which had survived the credit crisis relatively well, thanks mainly to government austerity measures and big financial reserves. Vital oil prices rose quickly as the global economic situation improved on the back of an economic stimulus package by China” (Kane, 2020).
The entire global economy suffered as a result of the Great Financial Crisis, especially on a household level, however Saudi Arabia was able to get their feet back under them relatively quickly in comparison to the rest of the world. The IMF provided Saudi Arabia with $172,000,000 in relief in 2008. SAMA also took extraordinary measures in an attempt to aid in the crisis, directly intervening on behalf of government institutions. It was also mentioned in a journal that relatively speaking, Saudi Arabia managed to get through the crisis without too many hiccups (Al-Hamidy, 2009).
Like Saudi Arabia, Yemen’s economy primarily relies on oil exports. In the wake of 2008, oil prices took a huge hit. Yemen’s economy was confronted with a move away from oil reliance, but there was not a clear diversification strategy or plan (Gaghman, 2020). Even at the point of the 2008 Global Financial Crisis, the country had experienced war, conflict, and economic hardship of great amounts. In a report published by the Library of Congress the following relief is explained, “May 2006 the World Bank adopted an assistance strategy for Yemen under which it will provide approximately US$400 million in International Development Association (IDA) credits over the period FY 2006 to FY 2009. In November 2006, Yemen’s development partners pledged a total of US$5 billion in grants and concessional loans for the period 2007–10 to finance projects outlined in Yemen’s five-year (2006–10) Development Plan for Poverty Reduction (DPPR)” (Library of Congress, 2008). Yemen needed the assistance desperately, as their country’s economy was already suffering even before the crisis hit, so there was not much resistance to the aid. The same report mentioned above also discussed how Yemen was forced in the early 2000s to implement a structural adjustment facility; however, the government had little success in implementing these measures. The report also mentions the following in relation to the privatization of facilities: “The largest commercial bank, the National Bank of Yemen, which is fully state-owned, and the Yemen Bank for Reconstruction and Development, which is majority state-owned, are currently being restructured with the goal of eventual privatization. Because of fiscal difficulties in both banks, in 2004 Yemen’s government approved a plan to merge them, but no action has been taken” (Library of Congress, 2008). At the time of the report (2008), Yemen had yet to make significant improvements to their economic infrastructure to promote positive growth.
After being hit with crisis after crisis, economic or not, Yemen has had a bit rockier history over the last few years, counting the Great Financial Crisis as a great hit to their country.
Bibliography
Al-Hamidy, A. (2009). The Global Financial Crisis: Impact on Saudi Arabia. Retrieved 2020, from https://www.bis.org/publ/bppdf/bispap54u.pdf
Gaghman, A. (2020, March). 2008 Global Financial Recession Impact on Yemen’s Economy and Oil Industry. Retrieved September 25, 2020, from https://techniumscience.com/index.php/socialsciences/article/view/157/91
Kane, F. (2020, May 20). 2008’s global financial crisis. Retrieved September 25, 2020, from https://www.arabnews.com/node/1661481
Library of Congress. (2008, August). Country Profile: Yemen. Retrieved September 25, 2020, from https://www.loc.gov/rr/frd/cs/profiles/Yemen.pdf
Naaz Gauri, D. (2012). THE FINANCIAL CRISIS OF 2008 AND SAUDI ARABIA. Retrieved 2020, from https://pdfs.semanticscholar.org/3e1c/cf4bb9a9081a9803f25ef79b3b18fb50cf56.pdf
Middle East & North Africa 