Conflict drops Syria’s GDP in half

30 de junho de 2016

São Paulo – Syria’s Gross Domestic Product (GDP) declined 57% from 2010 to 2015 and could take two decades to return to the same level of before the conflict between the government and opposing groups that started in 2011. That’s the conclusion reached by the preliminary report on Syria’s economy released this Thursday (30) by the International Monetary Fund (IMF). According to the document, signed by researchers Jeanne Gobat and Kristina Kostial, the GDP of the oil and gas sector declined 28% per year between 2011 and 2015 while the non-oil sector had dropped, on average, 14% in the same period.

Other impacts of the war were decline of production and exports of commodities, destruction of infrastructure, shortage in power supply to the industry, difficulty in achieving funding and fragmentation of the economy.

According to the document, before the conflict, Syria had put into motion measures to boost the economy and reduce its dependency on oil and gas production. Although unemployment and poverty were high, the country had a controlled and low inflation rate, was cutting energy subsidies, had asked permission to become a member of the World Trade Organization (WTO) and had signed a free trade agreement with Turkey in 2007. Those were measures planned to diversify the economy while facing a drop in oil reserves and production.

“The 2011 uprising has evolved into a crippling and violent civil war with fierce fighting between the regime and various secular and Islamist opposition groups in different parts of the country”, says the report. The study acknowledges that the country has fragmented in autonomous provinces controlled by the government, autonomous rebel groups and the Islamic State.

The document emphasizes also the “humanitarian disaster” caused by five years of a still ongoing war. In 2010, the country had 22.1 million people and, currently, approximately 20% less. Nearly 4.7 million people fled Syria headed to neighbor countries, 900,000 requested asylum in Europe and there are still 7.6 million internally displaced people, according to an estimate by the United Nations. According to the United Nations High Commissioner for Refugees (UNHCR), 250,000 people died and 800,000 were wounded in the conflict.

“The Syrian Center for Policy Research (SCPR) estimates that more than 60 percent of the labor force (about 3.5 million) is unemployed, with some 3 million having lost their jobs as a result of the conflict. SCPR also estimated the overall poverty rate in 2014 to be 83 percent (compared to 12.4 percent in 2007). Many Syrians, including children, have had to find jobs in the informal sector to offset the loss of income”, says the document. SCPR is a research center on Syria.

The report also suggests what needs to be done once the conflict is over. In the short term, economic measures need to focus on the poor and, once the recovery is “underway”, they will need to focus on non-oil sectors, reconstruction of public institutions, labor training and technology to increase productivity.

“The immediate focus would need to be on urgent humanitarian assistance, restoring macroeconomic stability and rebuilding institutional capacity to implement cohesive and meaningful reforms. In the medium term, the reform agenda could include diversifying the economy, creating jobs for the young and displaced, tackling environmental issues and addressing long-standing issues such as the regional disparities in income and greater political and social inclusion”, says the study.

*Translated by Sérgio Kakitani