Established by Fathi Ibrahim Bayoud 2005 - Homs

Features of Syria’s Economic Disaster

Analysis | 2018-01-20 11:08:01
Features of Syria’s Economic Disaster

(Zaman Al Wasl)- The Syrian economy has been exhausted and destructed for the past six years. It is characterized by the high inflation rate, budget deficit, poverty, unemployment, debt and reduced economic gross domestic product (GDP). 

The situation does not appear as if it will improve in 2018 even with the adoption of the general budget for 2018 given the deficit is more than 170 billion Syrian Pounds (SP). With revenues estimated at less than 2478 billion SP and expenditures estimated at more than 3187 billion SP, Syria’s deficit will remain high. Faced with these figures, Bashar al-Assad recently approved the general national budget at around 6.5 billion US Dollars while the 2010 national budget was around 16.4 billion US Dollars.



-Rates and indicators-


Syria's economy continues to be affected by the al-Assad regime's war on the people’s revolution launched in March 2011. The GDP fell from 60 billion US Dollars in 2010 to 27 billion US Dollars in 2016 with expectations that it would have reached around 30 billion US Dollars in 2017.

There has been a drastic increase in the external debt declared, excluding the debts to the Russian and Iranian militaries, to reach around 11 billion US Dollars after the external debt was at zero in 2010. According to official Syrian statistics, the losses from the war are estimated at above 275 billion US Dollars. International organizations estimate the cost of reconstruction at over 300 billion US Dollars which are higher than the losses sustained in the Second World War.

According to a United Nations report issued in September 2017, around 85% of the population in Syria is poor. Of them, 6.7 million Syrians are suffering from acute food insecurity and require emergency humanitarian assistance after prices rose by 1100% and wages were stabilized at 30,000 SP (around 75 US Dollars).

According to a World Bank study, 6 out of 10 Syrians live in extreme poverty because of the war.

In the first four years of the war, around 538,000 jobs were lost each year, resulting in around 6.1 million Syrians who are either unemployed, do not work, and are uninvolved in any form of study or training. 

The unemployment rate among youths reached 78%. In the long term, the high levels of unemployment results in a massive loss of human capital, brain drain and a shortage of skills available in Syria. 

According to the World Bank study, exports fell by 92% and the current account deficit reached 28% of last year’s GDP. The cash reserve declined from 21 billion US Dollars in 2010 to about 1 billion US Dollars in 2015 and 750 million US Dollars in 2017. The total public debt rose from 30% in 2010 to more than 150% in 2017.



-Sectoral and cumulative losses-


The World Bank estimated the Syrian cumulative losses at the end of 2016 at around 226 billion US Dollars, which is more than four times the Syrian GDP. According to a report by the Workers' Union in Syria (governmental institution), the losses increased in 2017 to around 275 billion US Dollars.

In a recent statement to Sputnik, Najib Fares, the Director General of the Public Organization for Railways in Syria, said that the railway sector’s losses are estimated at 500 billion SP at the end of 2017. The railway sector is considered a limited sector without great potential, but the figure raise the question about the losses in more vital economic sectors that have been directly targeted by the regime and its allies, or even by the Islamic State forces. 

The oil sector has been greatly affected. Syrian oil production fell from about 385,000 barrels in 2011 to around 10,000 barrels by the end of 2017. According to data from the Ministry of Oil and Minerals Resources in Damascus, the losses in this sector are estimated at around 65 billion US Dollars. Syria went from being a source producing around 140,000 barrels of oil per day in 2011 to an oil importer at the cost of 7 million US Dollars per day.

After 50% of the power lines across Syria, around 5000 centers and 80 transformer stations were damaged, the electricity sector’s losses are estimated at around 800 billion US Dollars.

According to data from the Ministry of Agriculture in Damascus, about 25% of the agricultural infrastructure was damaged by the war. Production decreased by about 50% after the cultivatable areas decreased by more than 40%. The losses in this sector amount to around 360 billion SP that is equivalent to 9.8% of the cumulative losses of the output GDP. Perhaps more importantly, Syria shifted from being an agricultural production source to become an importer especially after wheat production fell from about 3.5 million tons to about 1.7 million tons.

Following the destruction of around 2.6 million buildings and houses, the infrastructure sector has suffered large losses of more than 60 billion US Dollars according to international reports. Over 11 million Syrians have been displaced and forced to migrate from Syria. The World Bank classified it as the largest migration since World War Two.

The tourism sector has been paralyzed for the past six years, except for a negligible number of visitors and persons coming to Syria to fight with the al-Assad forces who the Ministry of Tourism in Damascus register as tourists. The tourism sector has lost more than 330 billion SP after 1200 establishments were destroyed or went out of service, and more than 258,000 persons working in this sector before the war lost their jobs. 

The industrial sector in Syria was also affected by the war as around 1962 private businesses and large governmental businesses in areas of conflict were damaged or destroyed. The losses are estimated at around 1000 billion SP distributed equally between private and public industrial establishments.

The financial sector also suffered large losses due to the destruction or the cessation of lending. According to official Syrian data, until the third quarter of 2017, the banking sector lost around 143 billion SP.



-Human Capital Disasters-


The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) report indicates that 400,000 people have been killed in Syria, half of the population has migrated or is internally displaced, 2.8 million people suffer from physical disabilities, one million Syrians are living under siege, and 30,000 face monthly psychological shocks. 

According to reports from different countries of asylum, of which Turkey alone hosts over 3 million Syrian refugees, the lower estimate for the number of Syrians outside Syria is 7 million. The population of Syria, in its last estimate, is around 17 million people according to official Syrian statistics.

However, in a recent announcement, Mohammed Akram al-Qash, the head of the Syrian Commission for Family Affairs in Damascus, said that the population of Syrians within the country is estimated at 21 million people. The announcement raised suspicions and questions about the number of newcomers from Lebanon, Iran and Iraq who have bought or claimed property and whom the al-Assad regime has given citizenship. The al-Assad regime has given these newcomers citizenship as part of its plan to alter Syria’s demographic make-up. 

Regarding the unemployed, they are officially estimated to constitute 78% of the population. The regime Ministry of Labor said that law No 17 governing the relationship between employers and employees had caused the arbitrary dismissal of over 100,000 workers from the private sector. In the public sector, 185,000 workers were laid off based on article 137 of the workers’ law of 1985, modified in 2005, which prohibits workers from the right and freedom of litigation and receiving any compensation. These figures are from statistics released in 2015 when 5.4 million Syrians were working in the public sector. 

In a context related to the employment situation in Syria, so-called ‘one-stop’ employees in Damascus province, who have been working on daily contracts for more than seven years, demanded ago that their salaries be increased to 1000 SP (less than 40 US Dollars) recently. The demands come at time the Association for Consumer Protection in Damascus released a study estimating that the minimum monthly livelihood is around 175,000 SP.
Eqtsad- Adnan Abdelrazak
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