The Syria conflict enters its fourth year on Saturday. The violence has led to massive destruction and loss of human life, and soon to become the largest refugee population in the world.
The conflict’s terrible toll on Syria’s economy may not make headline news, but its devastation will last long after the violence is over.
“The armed-conflict in Syria is also a war on development,” reported the Syrian Center for Policy Research in October. “Its prosecution is obliterating physical, financial, human and social capital, with economic devastation and ruin as destructive to the country as warfare.”
Each year of war increases the social and economic toll.
“There is an informal rule that it usually takes a country around seven years to recover for each year of civil war,” said Michael Bowers, the senior director of Strategic Response and Global Emergencies at Mercy Corps, which is providing assistance to refugees in Jordan, Lebanon and Iraq.
And economic devastation is spilling across the region as refugees increase demand for public services, housing and jobs faster than host countries can absorb.
A stalled economy, losing its means to recover
Trade, mining, manufacture and the other industries that drove Syria’s economy are stalling. Unemployment has skyrocketed to a staggering 49 percent.
Agriculture has grown as a share of GDP even though the actual value of agricultural production has decreased. As other sectors fall away, agriculture is becoming a larger piece of a failing economy. The Syrian Center for Policy Research calls these changes “tantamount to wholesale de-industrialisation.”
At this point, it could take 30 years for the Syrian economy to bring its GDP back to its pre-crisis growth rate of 5 percent in 2010, said Alex Pollock, a microfinance director with the United Nations Relief and Works Agency.
Meanwhile, schools that should be educating the next generation of workers are being destroyed or taken over for shelters. Half of Syrian children have dropped out entirely, losing skills that could help reboot the economy in the future.
And the crisis has depleted families’ savings and coping strategies. Since the conflict began three years ago, 7.9 million people have fallen into poverty in the crumbling economy. Of the new poor, 4.4 million live in extreme poverty, unable to meet their basic needs.
Now, six and a half million Syrians have left the country in search of stability and safety. The influx is exhausting host economies in Lebanon, Jordan, Iraq and Egypt.
The Lebanon experience
Lebanon has so far received 1 million Syrian refugees. The number is predicted to rise to 1.6 million by the end of 2014, equivalent to 37 percent of Lebanon’s pre-crisis population.
The sudden population increase creates problems. Demand is bursting for housing and jobs. Particularly in Beirut and other urban areas, rents are climbing for locals and refugees alike. Refugees are increasing the labor supply by between 30 and 50 percent. The unemployment rate has doubled to over 20 percent since the onset of the crisis, and approximately 170,000 Lebanese have been pushed into poverty.
The Syrian crisis interrupted trade and tourism vital to the Lebanese economy. Simultaneously, the government spent over one billion dollars in response to increasing demand for public services, such as water, electricity and healthcare.
It remains too little to meet the exploding needs of the refugee population, but Lebanon can’t do much more on its own. For the first time since 2006, Lebanon’s public debt rose in 2012 to $57.7 billion. That’s 134 percent of the GDP—one of the highest debt ratios in the world.
More is needed
With other refugee-hosting nations facing similar pressures, the region has quickly become economically unstable.
"We are absolutely straining every effort and every nerve to be as welcoming and accommodating as possible,” said Prince Zeid Ra'ad al-Hussein, Jordan’s ambassador to the United Nations. “But we do still need a great deal of help and there has to be greater burden-sharing across the international community.”
The international community pledged more than $2.4 billion in aid this January. But according to United Nations secretary general Ban Ki-Moon that figure falls far short of the $6.5 billion needed to provide humanitarian aid to Syrian refugees and civilians inside the country this year.
The costs of rebuilding infrastructure and industry will likely be much greater.