BEIRUT: The war in Syria will have catastrophic effects on the country’s economy and society if it doesn’t end by next year, as U.N. experts predict unemployment will rise to above 50 percent by 2015.
In Beirut, officials from the Economic and Social Commission for West Asia unveiled their Survey of Economic and Social Developments in the Arab region 2012-2013, which includes sections on the impact of the Syrian crisis on Syria and its neighbor Lebanon.
In Syria they predicted by 2015 unemployment will rise to 58 percent and government revenues will drop by 90 percent.
The report’s authors employed a range of scenarios, based on the war ending sometime between 2012 and 2015, and expected a series of alarming consequences under the most pessimistic outcome: GDP loss of 57.9 percent, a drop in total public and private investment by 85.3 percent, a fall in export volume by 58.9 percent.
The report notes that Syria’s GDP in real terms shrunk by 31.4 percent last year, as the war “has brought the country to the edge of collapse, creating an acute social, economic and political crisis, with unbearable losses for the current and future generations.”
The report also says that Syria’s foreign currency reserves are projected to plunge to $2.1 billion, enough to cover only one month of imports; before the crisis the Central Bank had approximately $18 billion in reserves, the report says.
As for the impact on Lebanon next door, the report notes that its 7 percent GDP growth prior to the war dropped to 1.5 percent in 2011 and 1.2 percent last year.
The report, however, is dedicated to the region and it highlights factors that have been identified for years as the major features of disappointing or uneven economic growth and development in the Arab world, namely high levels of youth unemployment, the failure to involve women in the job market, and low worker productivity.
Speaking at the report’s issuing, Abdallah Dardari, the director of Economic Development and Globalization at ESCWA, said the Arab region faces the “double challenge” of trying to offset rising levels of poverty and unemployment – particularly among women and young people – at a time in which state revenues (except for energy) are under increasing pressures, such as political instability and violent conflict.
Dardari also said that “solutions exist in the region,” and the report proposes several concrete, short-term measures, even though a long-term process of altering the structure of Arab economies is needed.
One proposal involves setting up unemployment insurance funds in the region and another proposes introducing a social Value Added Tax, which would mean earmarking a portion of the consumption tax for social needs.
A third suggestion is to boost the role of employment offices in the region, which suffers from low levels of productivity and a lack of effective linkages between education systems and the job market.
Otherwise, perennial problems of high youth employment rates and low levels of female employment and female political participation cloud the regional socio-economic situation.
Dardari also raised the problem of current performance measuring methods, suggesting that instead of the poverty rate in the Arab world being based on $1.5 a day, the figure should be doubled to $3. This would mean a substantial rise from the current 7.4 percent of people living under the poverty line in Arab countries.