Direct talks between Saudi Arabia and Iran-backed Houthi rebels have significantly increased the likelihood of a formal peace agreement between warring factions in Yemen in the coming weeks. If momentum continues to build, this could pave the way for the resumption of the country’s oil exports, and investment in infrastructure, bringing life back to its devastated oil sector and ultimately boosting the economy. However, several challenges may hinder this optimistic outlook, such as the possibility of conflict-related developments, the volatility of aid, and the shortage of foreign exchange.

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SEE COUNTRY OUTLOOK: YEMEN, SAUDI ARABIA, IRAN