BY: Shatha Kalel
The future of the Syrian economy hinges on a complex mix of internal and external factors, with the country’s political stability, institutional reforms, and the return of both human capital and financial resources playing crucial roles. Following over a decade of war, Syria faces an economy severely scarred by destruction, institutional collapse, and the disruption of trade and production. The task ahead is enormous, and while there are signs of hope, significant challenges remain.
1. War Legacy and Economic Devastation
The economic destruction wrought by the Syrian civil war is staggering. From 2011 to 2023, Syria’s GDP contracted by approximately 85%, with the economy shrinking from $67.5 billion in 2011 to around $9 billion in 2023. The loss of critical infrastructure, the collapse of industrial and agricultural sectors, and the severe devaluation of the Syrian pound have led to widespread poverty, affecting more than 69% of the population, with extreme poverty affecting 25% of Syrians.
According to the World Bank, the conflict has caused an economic loss of up to $442 billion, with key sectors such as energy, agriculture, and manufacturing in ruins. Oil production, once a major economic driver, has plummeted, and Syria’s energy sector remains in disarray, further complicating any recovery efforts.
2. Political Stability and the Role of Regional and International Actors
The potential for economic recovery is inextricably linked to political stability. As President Bashar al-Assad’s regime has faced unprecedented challenges, the future of Syria’s political landscape is still uncertain. The country’s fragmented governance—split between various regional powers and competing political entities, including the Kurdish-controlled areas in the northeast and the Syrian Democratic Forces (SDF)—is a major obstacle.
Economic recovery, however, will depend on the establishment of a stable political order and a unified government capable of managing Syria’s diverse resources. Moreover, the willingness of the international community to engage with Syria, lift sanctions, and provide investment is critical. The U.S. and the EU, particularly, have expressed reluctance to remove sanctions, especially in light of Assad’s brutal repression of dissent during the conflict. For Syria to see real economic recovery, the lifting of sanctions, international aid, and investments are essential.
3. Human Capital and Diaspora Contributions
A key asset that Syria has at its disposal is its vast diaspora, many of whom have acquired valuable skills and financial resources while living abroad. There is a significant opportunity for the Syrian government to leverage this human capital to fuel the economy’s recovery. This could come in the form of remittances, investments in local industries, or the return of skilled professionals who can help rebuild vital sectors such as healthcare, education, and technology.
The return of displaced persons—estimated to be over 10 million Syrians, including refugees and internally displaced individuals—will be essential for rebuilding urban centers and revitalizing the labor market. However, this will only be feasible if the country can offer a stable environment, security, and adequate infrastructure to support their reintegration.
4. Restoring Key Economic Sectors
Syria’s economic future will largely depend on rebuilding its essential sectors, such as agriculture, energy, and manufacturing. The oil and gas sector is particularly crucial, not just for energy production but also for revenue generation. However, large portions of the country’s oil reserves are currently controlled by the Kurdish-led SDF, complicating efforts to regain control over these valuable resources.
Additionally, Syria’s agriculture sector, once a major pillar of the economy, needs substantial investment to rebuild its capabilities, especially in regions that were devastated by the conflict. Restoring agricultural productivity will require addressing issues such as water shortages, land mine clearance, and rebuilding farming infrastructure. Furthermore, Syria’s manufacturing sector, which was heavily damaged during the war, needs to be revitalized, with the government focusing on sectors such as textiles, cement, and food processing.
5. Reconstruction and Infrastructure Development
Reconstruction will be one of the most immediate tasks facing the Syrian government. With major urban centers like Aleppo, Homs, and parts of Damascus heavily damaged, rebuilding efforts will require massive investments. The reconstruction of infrastructure—ranging from roads, electricity grids, and water supply systems, to schools, hospitals, and housing—must be prioritized. The cost of this rebuilding is immense, and it is unclear whether Syria will be able to fund these efforts without external support.
Countries in the Arab world, such as the UAE, Saudi Arabia, and Qatar, have expressed interest in supporting reconstruction, especially if a political settlement is reached and sanctions are lifted. However, these countries may hesitate to invest without assurances that the Assad regime’s grip on power will remain secure.
6. The Role of Sanctions and External Aid
Sanctions remain one of the most significant hurdles for Syria’s economic recovery. While many experts agree that lifting sanctions will be essential for Syria to regain its footing, the international community is divided on this issue. The U.S., along with its allies in the EU, has been reluctant to ease sanctions as long as Assad is in power, citing human rights abuses and the lack of political reforms. The United Nations and various international organizations have called for greater humanitarian aid, but this support is insufficient for long-term recovery.
In the absence of substantial foreign direct investment (FDI), Syria’s recovery will depend on rebuilding trust with its neighbors and the international community. This includes stabilizing regional relations with countries such as Turkey and Iraq, as well as engaging with global financial institutions such as the World Bank and IMF.
7. Prospects for the Future
Optimistically, Syria’s recovery could take between 7 to 10 years, assuming political stability, successful reconstruction, and the lifting of sanctions. Analysts suggest that once these conditions are met, the country could gradually return to pre-conflict economic levels, with the potential for even stronger growth, especially if the country can reintegrate its vast human capital and leverage its natural resources.
However, this is highly contingent on overcoming the political fragmentation that has characterized Syria since 2011. If regional and international actors can agree on a political solution that benefits all Syrians, the country’s economy might see a renaissance, driven by new investments, restored industries, and increased exports.
In conclusion, while Syria’s economy faces daunting challenges, there are significant opportunities for recovery. The combination of external support, a stable political environment, and strategic investment in key sectors could help the country rebuild, though the road to recovery is likely to be long and fraught with difficulties. Only time will tell whether Syria can navigate this complex process and emerge as a prosperous and stable nation once again.
Economic Unit/North America Office
Al Rawabet Center for Research and Strategic Studies