BEIRUT: Syria’s civil war has ravaged the country’s economy, causing damage that could take years to repair, and people have been forced to focus on finding basic necessities, like food and fuel, experts say.
Gross domestic product has plunged nearly 40 percent since 2010, the year before the war began, as production has seized up, the regime has been rocked by international sanctions and oil fields have been lost to rebels.
But so far, the economy has avoided total collapse, with the currency stabilizing of late despite a massive loss in value, and crucial financial support forthcoming from key allies Russia and Iran.
“The Syrian economy has transformed dramatically ... the economy that we used to know has been destroyed to a large extent,” said economist Jihad Yazigi, author of The Syria Report, an economic news site.
“There are vast segments of the Syrian economy that have stopped production, and many economy players have left the country,” Yazigi added.
“The war has produced a new economy, which is what we call a war economy.
“Robbery, kidnappings, checkpoints and control over oil fields ... have become the sources of income,” he said.
“Both the informal economy and the war economy are on the rise. There are some businessmen who have benefited from the war, and new institutions and networks have grown with it,” he added.
The conflict began in March 2011, when the regime cracked down brutally on peaceful anti-government protests.
The opposition took up arms and the country spiraled into a civil war that has killed more than 140,000 people and displaced nearly half the population internally or externally.
“Syria’s economy has become a war economy because Syria is a battleground where there are multiple, complex fronts,” according to Mazen Irsheid of Jordan’s United Financial Investment Co.
The effects on the economy have been devastating. The Economist Intelligence Unit estimated GDP would plunge this year to $34 billion from $60 billion in 2010.
The United Nations says the unemployment rate is nearly 50 percent, and that half of Syria’s population of 23 million is now living below the poverty line, with 4.4 million languishing in “extreme poverty.”
The dire economic straits have forced Syria’s residents to adjust, as people focus on securing such basic goods as bread, tea and sugar.
According to official Syrian estimates, the tourism sector has lost $1.5 billion and manufacturing has lost $2.2 billion since the war began.
Oil production has fallen by 96 percent, from 385,000 barrels per day to just 14,000.
The industry has been doubly buffeted, first by European sanctions and then by the gradual loss to rebels of the country’s biggest oil fields, in the east.
Europe once bought 90 percent of Syria’s oil, but now production is too meager to even meet domestic needs of around 150,000 bpd.
That has forced Syria to make up the shortfall by importing some $400 million of oil a month from key ally Iran.
Tehran has proved key in propping up Syria’s economy, extending the regime a $3.6 billion credit line in July.
And Syria’s other key foreign backer, Russia, has also played its part in supporting the country’s flailing economy.
In December, with Moscow’s backing, Damascus signed a deal authorizing a Russian firm to explore its territorial waters for oil and gas.
“Syria is still on its feet economically speaking, thanks to the support of its allies,” Irsheid said. “As a result, we can’t expect that it will collapse economically anytime soon.”
Other factors have also kept the economy from the brink, including the exodus of some 2.5 million citizens-turned-refugees, government spending cuts and some international aid, experts say.
Irsheid said the regime’s recent military advances, backed by fighters from Hezbollah, had also helped to stabilize some economic indicators.
“In the past few months, the status of the Syrian pound has improved, even on the black market, because of those military gains on the ground.”
The EIU, in its 2014-18 forecast, predicts the economy will “bottom out” this year as it adjusts “to the realities of the military stalemate.”
But the long-term outlook remains bleak, with EIU predicting the economy would be “almost one-third smaller at the end of the forecast period compared with 2010.”
Irsheid said: “Even after the end of the crisis in Syria ... I don’t think the economic situation will be good.
“In fact, it may be worse than it is now. Syria has entered a long tunnel that will extend beyond the end of the crisis.”