Syria economy unlikely to return to growth until 2020, BMI Research says

Syria's economy is unlikely to return to growth until 2020, even though the intensity of the fighting in the war-torn country has slowed down this year, according to the latest report by BMI Research.

"Unprecedented levels of destruction, combined with large-scale emigration, will weigh on Syria's productive capacities in the long run. According to our estimates, the Syrian economy has more than halved since the start of the conflict," BMI said.

"The relative reduction of violence since the start of the year, and the introduction of de-escalation zones across the country, will ease the pace of devastation, but the economy remains  in the doldrums."

Syria's GDP dropped to US$23.6 billion in 2016 from $59.8bn in 2010, the last full year of peace the country has experienced. Violence broke out in the country in early-2011, following the events of the Arab Spring, which prompted the overthrown of governments in Tunisia and Egypt. Civil conflict quickly spread throughout Syria from March 2011 and has continued largely unabated ever since.

The World Bank said in July that the Syrian war has cost the country $226bn since the outbreak of hostilities and that from 2010 to 2015 more than 500,000 jobs were lost annually. The war has cost 320,000 people their lives, according to the Washington-based financial institution said.

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BMI noted that the destruction of infrastructure in the country would have long term consequences on the economy. In Aleppo, Syria's largest city, about a third of homes have been destroyed while two thirds of healthcare facilities in the city have been raised to the ground.

"Syria will continue to face the effects of large-scale destructions over the coming decade, through their effects on human and physical capital," the report said.

"In more than six years of fighting, the country's infrastructure network has experienced significant damage, a phenomenon which has been particularly salient in areas controlled by Islamic State and by the opposition, which have suffered from heavy bombings from the US-led coalition for the former, and Russia - a main sponsor of President Bashar al-Assad's regime - for the latter."

Alongside the physical damage has been a massive depletion of human capital since the outbreak of hostilities began. Out of a population of 21m before the war, there are some 5.1m Syrian refugees registered outside the country and 6.3m that have been displaced internally. The humanitarian situation inside the country has been made worse by a sharp drop in cereal production, which fell 28 per cent year-on-year in 2016, but has shown some signs of recovery so far this year.

The cost of reconstructing Syria has been estimated at over $200bn and it's expected that Iran and Russia, the country's main backers, would lead efforts to help bring Syria back to its feet. China may also help but that would not be enough to meet the massive amount needed to repair the country.

"When the country returns to some kind of normality, we are looking at the international community having to lend a lot of money to rebuild it," said Pat Thaker, an analyst at the Economist Intelligence Unit in London.

"I wouldn't underestimate the ability of Russia and Iran to help in the reconstruction. They have their own economic problems, but they will be able to help. European organizations will also probably come up with a lot of the money. It will be in the interests of these countries too to bring stability and growth back to Syria."