The fall of Bashar al-Assad’s regime in Syria shocked the world and ended more than 50 years of rule by what became a dynasty of dictators. Cities under the control of Damascus fell to rebel forces one after the other after an 11-day lightning offensive, and thousands of political prisoners were liberated from al-Assad's torture dungeons. It brought the country to a moment of great change—and potentially, towards democracy—opening space for civic discourse for the first time in decades.
But there are also now enormous challenges for the country’s future, particularly regarding development and economic recovery. The cost of reconstruction in Syria after the long years of war is estimated to range between $250bn and $400bn.
And it cannot rely on its national economy to draw funds from. According to government figures, Syria’s 2023 GDP was estimated at $17.5bn—a stark contrast to its $60bn value before 2011. Numbers from the World Bank point to a bigger drop. Its bi-annual Syria Economic Monitor puts 2023 GDP at a mere $6.2bn.
The figures point to the enormous challenge ahead of rebuilding a devastated, war-torn country with a much-diminished economy. Al Majalla looks at some of the key short- and medium-term financial and economic issues that the successors of the Assad regime will face as the country heads to a new future.
1. Crippling sanctions
Attention has already focused on the sanctions imposed by the West on Syria under the Assad regime. They are seen as the main impediment to economic recovery and the re-establishment of a key means of funding for it, foreign direct investment (FDI).
The prospects of sanctions being lifted depend on international reaction to the makeup of Syria’s next government. The main group behind regime change—Hayat Tahir Sham (HTS)—will now be one of the country's main political and military actors. But it is still designated as a terrorist organisation by a range of major nations, including the United States, European countries and Turkey.
Read more: What needs to happen to rebuild Syria
Whether or not sanctions are lifted, Syria has a series of structural economic problems that must be addressed to help spur recovery. Without establishing a sense of stability in terms of policy and oversight, it will be difficult to bring in the FDI that will be needed to help fund a new future.
Some FDI has been secured from limited sources since 2011, mostly Iran and Russia. But after the Syrian regime has fallen, there is hope that desperately-needed funds could now come in from Gulf nations, which are seen as ready to renew their links and influence in the country.
But they are also likely to wait to assess the extent of the prominent role now being taken by HTS in Syria. The group is still suspiciously viewed by most Gulf states. Dr Anwar Gargash, an advisor to the president of the United Arab Emirates, Sheikh Mohamed bin Zayed, pledged to “keep a close eye” on developments in Syria but said there were clear worries about escalating chaos and extremism.
Those are not the only issues shaping the country’s outlook at this pivotal time. The turbulence in Syria is feeding through into its currency. The pound is unstable and exposed to continuous depreciation, which is among the most serious financial problems faced by the country’s people.
2. Weak currency
In the aftermath of the regime's fall, the pound's value slid. At the time of this writing, the price of a dollar reached 22,000 pounds in Damascus on the black market. The pound’s purchasing power for the world’s reserve currency was even weaker in Aleppo, where a dollar cost 40,000 pounds.
Since October 2019, the knock-on effects of Lebanon’s financial crisis have also played a part in the collapse of the Syrian pound. But the currency’s decline owes more to the structural problems of its home economy.
The plight of the pound adds to uncertainty and deepens the disincentive for international investors to return to Syria, clouding the outlook for any profits and raising questions over the cost of investment in the near term as well as for longer.
In parts of the northwest, there are reports that Syrians have abandoned the pound and adopted the Turkish lira as the main means of exchange, a practice in place for several years now. Returning to the pound would not be popular with the currency now known for such instability.
3. Damaged infrastructure and resource shortages
National infrastructure—and Syria’s transport network in particular—is severely damaged. The difficulties caused by moving around the country are adding to continuous increases in the cost of production. There are also shortages of key commodities and energy resources, especially fuel and electricity.
The main oil and natural gas resources are in the northeast under the Kurds' control, but energy sector production has continued to decline drastically. In 2010, oil production averaged just under 400,000 barrels a day. According to the US Energy Information Administration, by 2023, it was around 91,000 bpd. That is vastly insufficient to meet local needs.
The country also suffers from a shortage of qualified labour, compounded by sustained high emigration rates, particularly of young graduates. It remains too early to tell if al-Assad’s overthrow may change that trend.
4. A restrained private sector
The deposed regime saw the private sector as the main engine for economic growth and job creation. Nonetheless, after 13 years of war, there is a need for modernisation and rebuilding if such ambitions can be attained.
Syria’s private sector is mainly composed of small and medium-sized enterprises with limited capabilities, as well as micro businesses. The state has limited resources to boost investment in the economy, particularly in terms of productive industries.
The low purchasing power of the population, with 90% of people living under the poverty line, makes boosting internal consumption difficult. That holds back internal trade and production dynamics for much of the economy, away from essential sectors, including food, energy and medicine.
5. Rising cost of living
Most Syrians struggle to cover their monthly needs with salaries. The current salary scale for civil servants stands at a minimum between 280,890 pounds and 336,348 pounds. This is greatly insufficient to sustain a family.
According to estimates made by Kassioun newspaper, the average cost of living for a five-member Syrian family living in Damascus reached 13.6mn pounds. That means the minimum wage covers only 2% of living costs.
Meanwhile, another cost of living measure, the Minimum Expenditure Basket (MEB), hit its highest ever level the last time it was compiled in May, at over 2.6mn pounds for a family of five. It has doubled in a year and tripled in two. There are jobs on offer in Syria. But they don’t pay enough to meet people’s basic needs.
