Greater than a decade of devastating clash has left Syria’s economic system in tatters, its infrastructure in ruins and its inhabitants deeply fragmented. The fledgling transitional executive in Damascus, which got here to energy following a lightning rise up offensive in December 2024, incessantly speaks of a “new Syria”. However the urgent query stays: how lengthy will restoration take?
The numbers are stark. In 2011, the yr warfare broke out, the Global Financial institution estimated Syria’s GDP at round US$67.5 billion (£50.7 billion). Its most up-to-date estimate, for 2023, places GDP at US$20 billion – a drop of greater than 70%. And those figures don’t inform the entire tale. Inflation and foreign money cave in make it tough to check through the years.
Some organisations be offering tough inflation estimates for Syria, however those are obscured through foreign money depreciation. The Syrian pound has misplaced greater than 99.5% of its price towards the United States buck since 2011, falling from 50 kilos in line with buck to round 10,375 kilos in line with buck lately. This critical depreciation distorts the true home worth image.
To get a greater sense of on-the-ground worth tendencies, I lately performed an off-the-cuff survey of non-tradable items and products and services throughout Syria. It incorporated such things as hire, haircuts and personal health center charges. The result of this exploratory means recommend that, in US buck phrases, costs for such pieces have risen through about 50% since 2010.
In different phrases, inflation in Syria has been actual and important – now not only a facet impact of change fee cave in. Patterns various sharply around the nation. Whilst costs have larger in spaces of relative balance and safe haven, they stagnated or declined in towns devastated through warfare.
Syrian troops patrolling a neighbourhood in Damascus in 2018.
Youssef Badawi / EPA
With this inflation adjustment, I estimate that Syria’s actual GDP in 2024 – measured in consistent 2010 US bucks – is nearer to US$13.3 billion, an 80% drop from its pre-war degree. This determine extra correctly displays the economic system’s precise efficiency, together with wellbeing, dwelling requirements and productiveness.
To place this determine in context, Syria’s GDP would now be round US$121.3 billion – aside from the anomalous pandemic yr – had the economic system persevered rising at its pre-war moderate of five% in line with yr. The distance between this counterfactual and present output displays the immense toll of the warfare.
Rebuilding Syria’s economic system will likely be a huge problem. At a top enlargement fee of seven% in line with yr, it might nonetheless take over 30 years for Syria to catch as much as its pre-war trajectory. Even with exceptionally robust enlargement of 10%, the method would stretch over twenty years.
Bounce-starting enlargement
The reasons of Syria’s financial cave in are widely known. The warfare resulted within the destruction of a lot of its bodily capital, the displacement of labour, the erosion of establishments and the imposition of sweeping world sanctions.
Some US and EU sanctions had been eased. However this on my own gained’t be sufficient to opposite Syria’s financial decline. In the meantime, the Trump management in the United States has introduced 41% price lists on Syrian imports, hindering long term industry with the United States.
The Syrian executive is having a bet closely on overseas direct funding (FDI) to jump-start enlargement. This means comes with dangers. In weakly regulated markets, FDI can elevate each working and client prices – specifically in monopolistic or oligopolistic sectors akin to utilities, telecommunications and ports. This will likely give a contribution to emerging inflation and aggravating inequality.
Syria’s pre-war financial type, which used to be characterized through crony capitalism and restricted festival, raises additional considerations about whether or not FDI will in truth expand alternative or just entrench current elites. With out clear coverage frameworks, there’s a risk that liberalisation may just crowd out native companies, undermine capability development and fail to diversify the economic system.
The privatisation of state-owned enterprises in Syria is already underway, regardless that the way forward for the social protection web stays unclear. Larger openness might draw in capital and experience, however it’s going to additionally disclose Syria to world marketplace volatility. That is an unfamiliar dynamic for a rustic that has lengthy been insulated.
Agriculture used to be a big motive force of the Syrian economic system sooner than the warfare.
Mohammed Badra / EPA
The vital query is whether or not the Syrian executive’s technique can generate an export-driven restoration. A more potent present account and more healthy foreign currency echange reserves would spice up the capability of Syria’s economic system to resist long term financial shocks.
Agriculture, as soon as a big contributor to GDP, will have to be a coverage precedence. So too will have to revitalising Syria’s once-globally aggressive production sectors, such because the textile business in Aleppo.
The oil and gasoline sector, which traditionally underpinned fiscal revenues, can even play a key position if balance returns. Different imaginable enlargement spaces come with boosting the tourism sector and positioning Syria as a powerhouse for gentle production.
But FDI, and the wider surge in capital inflows, can’t ship monetary balance on their very own. Many post-conflict nations enjoy balance-of-payments pressures and renewed financial crises if capital flows don’t seem to be smartly controlled.
Analysis on world capital glide dynamics during the last 4 a long time has supplied robust proof of boom-bust cycles in those flows, particularly in creating and rising marketplace economies.
Rebuilding efficient establishments, the rule of thumb of legislation and duty mechanisms in Syria will thus be vital. Those are very important now not handiest to draw funding, but additionally to stop the corruption and rent-seeking that incessantly characterise post-war transitions.
A reputable trail ahead should additionally come with the lively mobilisation of Syria’s diaspora – a deep reservoir of capital, abilities and entrepreneurial power. Roughly 400,000 Syrians have returned from neighbouring nations since December 2024, maximum from Turkey. This has incorporated a handful of outstanding businessmen.
A last level is that any sustainable restoration depends upon political inclusion, particularly given Syria’s ethnic and spiritual variety. Economies that include pluralism have a tendency to be extra resilient and wealthy. Lengthy-term prosperity will rely now not handiest on sound insurance policies but additionally on the type of state Syria chooses to rebuild.
The approaching years will likely be decisive. Syria’s financial trajectory hinges on whether or not it might probably strike the proper stability between opening to world markets and protective susceptible home financial sectors from the shocks of speedy liberalisation.
With prudent policymaking, clear governance and inclusive political answers, Syria can start to lay the basis for long-term financial restoration. A lot depends upon the selections made on this pivotal bankruptcy.
