More than a decade of devastating conflict has left Syria's economy in tatters, its infrastructure in ruins and its population deeply fragmented . The fledgling transitional government in Damascus, which came to power following a lightning rebel offensive in December 2024, often speaks of a "new Syria". But the pressing question remains: how long will recovery take?
Author
- Faek Menla Ali
Associate Professor in Finance, University of Sussex
The numbers are stark. In 2011, the year war broke out, the World Bank estimated Syria's GDP at around US$67.5 billion (£50.7 billion). Its most recent estimate , for 2023, puts GDP at US$20 billion - a drop of more than 70%. And these figures don't tell the whole story. Inflation and currency collapse make it difficult to compare over time.
Some organisations offer rough inflation estimates for Syria, but these are obscured by currency depreciation. The Syrian pound has lost more than 99.5% of its value against the US dollar since 2011, falling from 50 pounds per dollar to around 10,375 pounds per dollar today. This severe depreciation distorts the real domestic price picture.
To get a better sense of on-the-ground price trends, I recently conducted an informal survey of non-tradable goods and services across Syria. It included things like rent, haircuts and private clinic fees. The results of this exploratory approach suggest that, in US dollar terms, prices for such items have risen by about 50% since 2010.
In other words, inflation in Syria has been real and significant - not just a side effect of exchange rate collapse. Patterns varied sharply across the country. While prices have increased in areas of relative stability and refuge, they stagnated or declined in cities devastated by war.
With this inflation adjustment, I estimate that Syria's real GDP in 2024 - measured in constant 2010 US dollars - is closer to US$13.3 billion, an 80% drop from its pre-war level. This figure more accurately reflects the economy's actual performance, including wellbeing, living standards and productivity.
To put this figure in context, Syria's GDP would now be around US$121.3 billion - excluding the anomalous pandemic year - had the economy continued growing at its pre-war average of 5% per year. The gap between this counterfactual and current output reflects the immense toll of the war.
Rebuilding Syria's economy will be a monumental challenge. At a high growth rate of 7% per year, it would still take over 30 years for Syria to catch up to its pre-war trajectory. Even with exceptionally strong growth of 10%, the process would stretch over two decades.
Jump-starting growth
The causes of Syria's economic collapse are well known. The war resulted in the destruction of much of its physical capital, the displacement of labour, the erosion of institutions and the imposition of sweeping international sanctions.
Some US and EU sanctions have been eased . But this alone won't be enough to reverse Syria's economic decline. Meanwhile, the Trump administration in the US has announced 41% tariffs on Syrian imports, hindering future trade with the US.
The Syrian government is betting heavily on foreign direct investment (FDI) to jump-start growth . This approach comes with risks. In weakly regulated markets, FDI can raise both operating and consumer costs - particularly in monopolistic or oligopolistic sectors such as utilities, telecommunications and ports. This may contribute to rising inflation and worsening inequality.
Syria's pre-war economic model, which was characterised by crony capitalism and limited competition, raises further concerns about whether FDI will genuinely broaden opportunity or simply entrench existing elites. Without transparent policy frameworks, there is a danger that liberalisation could crowd out local firms, undermine capacity building and fail to diversify the economy.
The privatisation of state-owned enterprises in Syria is already underway , though the future of the social safety net remains unclear. Greater openness may attract capital and expertise, but it will also expose Syria to global market volatility. This is an unfamiliar dynamic for a country that has long been insulated.
The critical question is whether the Syrian government's strategy can generate an export-driven recovery. A stronger current account and healthier foreign currency reserves would boost the capacity of Syria's economy to withstand future economic shocks.
Agriculture, once a major contributor to GDP , should be a policy priority. So too should revitalising Syria's once-globally competitive manufacturing sectors, such as the textile industry in Aleppo.
The oil and gas sector, which historically underpinned fiscal revenues , will also play a key role if stability returns. Other possible growth areas include boosting the tourism sector and positioning Syria as a powerhouse for light manufacturing.
Yet FDI, and the broader surge in capital inflows, cannot deliver financial stability on their own. Many post-conflict countries experience balance-of-payments pressures and renewed economic crises if capital flows are not well managed.
Research on global capital flow dynamics over the past four decades has provided strong evidence of boom-bust cycles in these flows, especially in developing and emerging market economies.
Rebuilding effective institutions, the rule of law and accountability mechanisms in Syria will thus be critical. These are essential not only to attract investment, but also to prevent the corruption and rent-seeking that often characterise post-war transitions.
A credible path forward must also include the active mobilisation of Syria's diaspora - a deep reservoir of capital, skills and entrepreneurial energy. Approximately 400,000 Syrians have returned from neighbouring countries since December 2024, most from Turkey. This has included a handful of prominent businessmen.
A final point is that any sustainable recovery depends on political inclusion, especially given Syria's ethnic and religious diversity. Economies that embrace pluralism tend to be more resilient and prosperous. Long-term prosperity will depend not only on sound policies but also on the kind of state Syria chooses to rebuild.
The coming years will be decisive. Syria's economic trajectory hinges on whether it can strike the right balance between opening to global markets and protecting vulnerable domestic economic sectors from the shocks of rapid liberalisation.
With prudent policymaking, transparent governance and inclusive political solutions, Syria can begin to lay the foundation for long-term economic recovery. Much depends on the choices made in this pivotal chapter.
Faek Menla Ali does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
