Houthi control of Yemen creates parallel war economy

The Houthi takeover of Sanaa in late 2014 and the subsequent outbreak of war in 2015 have fundamentally restructured the Yemeni economy, resulting in one of the most damaged economies globally. According to World Bank reports, real GDP per capita fell by 54 percent between 2015 and 2023, reaching a 58 percent decline by 2024, which has returned individual income to levels seen at the start of the millennium.

The country is currently divided into two distinct economic zones with competing financial and administrative institutions. Approximately 70 percent of the population resides in Houthi-controlled northern and western regions, while oil and gas wealth remains concentrated in provinces under the internationally recognized government. This division has created dual pricing and banking systems, exacerbating the collapse of the local currency.

A report by Al-Makha Center for Strategic Studies describes a shift toward a "war economy" in Houthi-controlled areas. The group has reportedly tightened control over commercial registration, taxation, energy, exchange services, and imports. These policies have increased the cost of transporting goods between provinces by 20 to 30 percent and raised basic commodity prices by 10 to 20 percent. In 2023, revenues collected in these areas reached approximately 2.2 trillion riyals, or roughly 3.7 billion dollars, through various levies and taxes.