A report by a Syrian research center has estimated the economic losses of the Syrian economy over the last 22 months at about $48.4 billion — equal to 81.7% of the country's GDP for 2010. The losses impacted a number of sectors, with 50% being attributed to a loss in GDP and 43% a result of damage in capital stock. The report, entitled "The Socioeconomic Roots and Impact of the Syrian Crisis," was prepared by the Syrian Center for Policy Research (SCPR), which is affiliated with the Syrian Society for Culture and Knowledge. The report noted that Syria has lost nearly two decades' worth of human-development achievements and that the level of economic collapse was "substantial" even when compared to conflict losses in other countries.
The report predicted that the crisis would lead to an 18.8% decrease in GDP for 2012, while the deficit balance is expected to reach 18.5% of GDP for the same year. This means that the crisis will have a strong negative impact on the balance of payments, bringing the cumulative deficit to $16 billion. This deficit has been financed by net foreign assets, which declined from approximately $18 billion in 2010 to $2 billion by the end of 2012.
The report estimated that the losses in Syrian capital stock amount to nearly $42 billion, concentrated in three components. First, there is a decrease in net investment equal to $12.4 billion. Second, there are losses due to poor capacity utilization and idle capital stock, which no longer contribute to the production process. The mining and tourism sectors are particularly affected. The estimated loss due to this component is $8.9 billion. The final component is the partial or full damage to capital stock (destroyed firms, equipment and buildings), and these losses are estimated to amount to $20.8 billion.
In a report prepared for the United Nations Economic and Social Commission for Western Asia (ESCWA), Syrian experts reported that the country's GDP had decreased by about 35% (approximately $20 billion), and predicted that this figure would see an 18% decrease each year. They noted that as soon as the crisis ends, Syria will need approximately $45 billion to fund reconstruction efforts. If the crisis continues, the reconstruction process will face many challenges, both in terms of cost and capabilities. In the event that the crisis persists until 2015, unemployment rates are expected to rise to 60%.
The SCPR report, however, estimated that by the end of 2012 the Syrian GDP had lost $24.1 billion — equaling 45.7% of the 2010 GDP. The report noted that most of the total losses (87%) were incurred by four sectors: internal trade, transportation, manufacturing and mining. These sectors contributed 53% of Syria's GDP in 2010; in 2012, their combined GDP share is estimated to have declined to 39%.
The report explained that the wholesale and retail trade sector, including restaurants and hotels, is one of the main employers of low-skilled workers. This sector incurred the largest share of the economic impact, with an estimated loss of 175 billion Syrian pounds [$2.5 billion], or 26% of total GDP losses. The report also noted a 50% decline in the tourism sector, as a result of a 60% decrease in revenue from foreign tourism in 2011. It is expected that the reduction in tourism value added for 2012 may reach 90%, as a result of the worsening security situation.
The report pointed to large losses suffered by the oil sector. As a result of sanctions and the withdrawal of foreign companies in October 2011, oil production was reduced by 47%. Meanwhile, the total estimated loss of the transportation and communications sector was estimated at approximately 157 billion Syrian pounds [$2.2 billion]. The manufacturing sector value added also contracted sharply (by 76%) in both the public and private sectors.
The report said that international sanctions, alongside reductions in oil and tax revenues, had led to a fiscal "shock" within Syria. To reduce the impact of sanctions, the Syrian government opted to reduce public investment expenditure in favor of current expenditure. Public investment decreased from 8.8% of GDP in 2010 to 3.5% of GDP in 2012. As a result, the government budget deficit surged from 3.8% in 2010 to 10.1% in 2012, while total public debt rose from 23% of GDP in 2010 to 40% of GDP in 2012. It is expected that total public debt will reach 46.2% of GDP.
The report criticizes the "muddled monetary policy" of the Central Bank of Syria, which was forced by the crisis to depreciate the official value of the Syrian pound by 67% until December 2012. This move was aimed at limiting speculation against the pound, while simultaneously promoting non-oil exports. This step, however, did not prevent the emergence of a parallel market in which the unofficial exchange rate exceeded 100 Syrian pounds per US dollar. The report also noted that the crisis had a large effect on the labor market, with the Syrian economy having lost 1.5 million job opportunities until the end of 2012. Meanwhile, the unemployment rate increased to 24.3%, which is expected to have a negative impact on 6 million Syrians' welfare and living conditions.