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Syria's economy devastated by war, propped up by allies

Update: March, 12/2014 - 11:00

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 per cent since 2010, the year before the war began, as production has seized up, the country been rocked by international sanctions and oil fields lost to rebels.

But so far, the economy has avoided total collapse, with the currency stabilising 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," he said.

"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."

"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 spiralled into a civil war that has killed more than 140,000 people and displaced nearly half the population internally or externally.

'Extreme poverty'

"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 (EIU) estimated GDP will plunge this year to $34 billion from $60 billion in 2010. The United Nations says the unemployment rate is nearly 50 per cent and that half 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 focusing on securing such basic needs as bread, tea and sugar.

According to official Syrian estimates, tourism sector has lost $1.5 billion and manufacturing has lost $2.2 billion since the war began.

Oil production has fallen by 96 per cent, from 385,000 barrels a 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 per cent of Syria's oil, but now production is too meagre to even meet domestic needs of around 150,000 barrels a day.

That has forced Syria to make up the shortfall by importing some $400 million of oil a month from Iran. AFP

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