Real GDP is projected to contract by 1.5% in 2024. As of 2022, poverty affects 69% of the population. Extreme poverty reached 27% up from a negligible level in 2009.
BEIRUT, May 24, 2024 ¡ª More than a decade of conflict compounded by external shocks have further worsened Syria¡¯s dire economic situation in 2023 and led to a dramatic deterioration in the welfare of Syrian households, according to two new World Bank reports released today. Continued funding shortfalls and limited access to humanitarian assistance have further drained the ability of households to meet basic needs amidst soaring prices, reduced access to essential services and rising unemployment.
The "" examines key features of Syria¡¯s macroeconomic policy and situates them in the context of the ongoing conflict in the country and the broader region. The Special Focus section of the report presents findings from "" report which provides an assessment of some of the welfare consequences of the conflict in Syria and highlights changes in selected welfare outcomes between the pre-conflict period (2000¨C10), and the summer of 2022, when the latest nationally representative survey was conducted under the Humanitarian Needs Assessment Programme.
Syria¡¯s economic situation continued to worsen in 2023. Economic activity, as proxied by nighttime light emissions, declined by 1.2% year-on-year (yoy), especially along Syria¡¯s western borders, in part due to weakened trade activity. Nighttime gas-flaring data also shows a 5.5% yoy drop in oil production, partly due to earthquake- and conflict-related infrastructure damage. Despite a rebound in agriculture production due to improved weather conditions in 2023 (from the near-historical low in 2022), the conflict has nonetheless severely affected the agriculture sector with the massive displacement of farmers and extensive damage to infrastructure and irrigation systems leading to a decline in crop yields. Conflict-related disruptions have also severely impacted foreign trade. A collapse in domestic industrial and agricultural output increased Syria¡¯s dependence on imports. Reliance on food imports, although already an issue prior to 2011, has also intensified with the conflict. In 2023, the Syrian pound depreciated substantially by 141% against the US dollar, while consumer price inflation is estimated to have risen by 93%, exacerbated by government subsidy cuts. As the economy slows, fiscal revenues continue to decline. In response, authorities have further reduced spending, with particularly sharp cuts to capital expenditure and continue to tighten the subsidy programs.
"Syria has experienced multiple overlapping shocks in 2023 with the February earthquakes and the spillover from the ongoing conflict in the Middle East," said Jean-Christophe Carret, World Bank Middle East Country Director. "More than a decade into the deadliest conflict of this century, Syria¡¯s capacity to absorb external economic shocks has been severely impaired particularly with the recent decline in aid flows and challenging access to humanitarian assistance and the heightened geopolitical regional tensions."
The Spring 2024 Syria Economic Monitor forecasts the protracted economic contraction to persist in 2024. Subject to extraordinarily high uncertainty, real GDP is projected to contract by 1.5% in 2024, extending the 1.2% decline in 2023. Private consumption, the primary engine of growth, will remain subdued as rising prices continue to erode purchasing power. Private investment is expected to remain weak amid a volatile security situation and considerable economic and policy uncertainty. Inflation is anticipated to remain high in 2024 due to the pass-through effects of currency depreciation, along with persistent shortages and potential further subsidy cuts of food and fuel. The 2024 budget signals a continued trend of subsidy reductions for essential commodities.
The report¡¯s Special Focus section provides a snapshot of the main findings of the Welfare of Syrian Households report. As of 2022, poverty affects 69% of the population ¡ª equivalent to about 14.5 million Syrians. Extreme poverty, while virtually non-existent before the conflict, affected more than one in four Syrians in 2022 and might have further deteriorated due to the devastating impact of the February 2023 earthquake. Multiple external factors, including the 2019 financial crisis in Lebanon, the COVID-19 pandemic, and the war in Ukraine, have contributed to further eroding the welfare of Syrian households in more recent years.
According to the report, poverty in Syria has a strong spatial connotation. More than 50% of the extreme poor live in just three governorates (Aleppo, Hama, and Deir-ez-Zor), and governorates in the northeastern part of the country show the highest poverty incidence. Female-headed households and internally displaced households are at the highest risk of poverty.
The report also highlights that international remittances have been a critical lifeline for Syrian households. Receiving remittances from abroad is associated with a 12 percentage-point reduction in extreme poverty rates and an 8 percentage-point reduction in poverty rates.
