Syria’s Economic Crossroads: Inclusive Recovery or Inevitable Collapse

Fourteen years of conflict in Syria have had a devastating socioeconomic impact. The country’s Gross Domestic Product (GDP) has plummeted to less than 35% of its 2011 level.^[1] Economic activities have been severely damaged, with approximately 50% of the country’s infrastructure destroyed or rendered inoperable, including key productive assets, roads, bridges, and power plants.^[2] By the end of 2024, average prices for goods and services had surged 210-fold compared to 2011.^[3] The human cost has been immense, with poverty rates soaring to 90% of the population and extreme poverty affecting 66% of Syrians. Food insecurity has reached critical levels, impacting 89% of the population, with 60% facing extreme food shortages.^[4]

The fall of the Assad regime in December 2024 has created an opportunity to rebuild an economy left in ruins. There is an urgent need to dismantle the foundations of Assad’s kleptocratic regime, which thrived on corruption and adopted reckless economic liberalisation and austerity measures, while addressing the destruction of business infrastructure and the dysfunction of state institutions. To achieve this, a sustainable development vision and plan must be designed and implemented inclusively, ensuring that policies reflect the needs of the broader population rather than being mandated from the top level down.

The Economic Paradigm of the New Authority

A few days after Hay’at Tahrir al-Sham (HTS) seized power in Damascus, led by Ahmed al-Sharaa (also known by his nom de guerre Abu Mohammad al-Jolani), numerous signs and announcements confirmed the country’s shift towards a free-market economy. The caretaker government has since taken several measures aligned with this shift. Among them is a tenfold increase in the price of bread alongside a 25% reduction in quantity,^[5] as well as a large-scale campaign to dismiss public employees under the pretext of removing “ghost workers” without clear or transparent criteria, affecting hundreds of thousands of employees.

Additionally, the government has prioritised opening the market to regional and international partners. It revived the free trade agreement with Turkey, significantly lowering customs tariffs on hundreds of Turkish goods. Furthermore, officials have announced plans to privatize state-owned ports and factories. The authority has also demonstrated a clear bias toward large business figures and investors at the expense of small and micro-enterprises, farmers, and labourers. Business leaders are regularly welcomed by the head of the authority, while broader economic stakeholders remain sidelined.

While the authority is implementing harsh domestic economic policies, it is simultaneously striving to gain international legitimacy, particularly given the history of HTS as a designated terrorist organization. By adopting free-market economic policies, it seeks to present itself as a credible partner to Western countries. In line with this strategy, Asaad Al-Shaibani, the foreign minister of the caretaker government, participated in the World Economic Forum in Davos, a key platform for promoting neoliberal policies, where he emphasised Syria’s transition toward a liberal economy.

The key question is whether Syria has the necessary conditions to implement neoliberal policies and rigid austerity measures. The clear answer is no. With 60% of the population facing extreme food shortages, increasing the price of bread, Syria’s most essential food, risks pushing millions into starvation. In a country with a weak business sector and fragile economic activity, opening the market to external competition without protective measures will not foster growth but rather accelerate the collapse of what remains of Syria’s domestic industries.

Moreover, privatising state-owned entities without thorough analysis or strategies to enhance their efficiency amounts to the reckless disposal of national assets, benefiting a select few while depriving the broader economy of critical resources. Similarly, the large-scale dismissal of public sector workers in a country where 90% of the population lives below the poverty line is not just an economic miscalculation, it directly undermines the well-being of the majority. These policies, rather than fostering economic recovery, risk deepening social and economic instability, exacerbating inequality, and further eroding Syria’s already fragile economic foundations.

Relying on external economic support, particularly from Turkey and Qatar, may offer the de facto authority a short-term relief but does not provide a foundation for sustainable economic recovery. Moreover, Syria’s business environment remains unattractive, largely due to ongoing instability and the persistence of international sanctions. While some sanctions have been partially lifted, US sanctions remain in place with no indication of a full repeal, especially following recent sectarian violence carried out by the authority’s military groups against civilians in coastal areas. These challenges further deter foreign investment and hinder long-term economic development.

Inclusive Recovery: A Path Forward

A legitimate and responsible authority must work to build trust between Syrians, including the business sector and state institutions, and this can only be achieved through meaningful inclusivity in both decision-making and implementation. Most economic decisions and strategies are currently being imposed from the top down, which is leading to the emergence of new economic elites and crony capitalists. The lack of inclusivity, combined with the economic cronyism and elitism prevalent under the Assad regime, contributed significantly to the destruction of the country’s economy. Syrians must avoid repeating the same path under a different ideological and political guise, ensuring that public governance dynamics are more inclusive and transparent to foster sustainable economic development and rebuild public trust.

An inclusive recovery for Syria would require a fundamental rethinking of economic governance, with a focus on transparency, accountability, and broad-based participation. Central to this approach would be institutional audits and reforms to identify inefficiencies, reduce corruption, and enhance inclusivity. By engaging independent auditors, civil society, and government representatives from diverse political backgrounds, Syrians can ensure that reforms are both effective and inclusive, preventing economic decisions from being monopolised by a small group of influential individuals from the same political or ideological background.

Additionally, the protection of vulnerable groups must be a priority, given the large number of Syrians living under the poverty level. Pro-poor economic growth policies should be adopted to ensure that decent job opportunities and improved living conditions are available to all, particularly for marginalised groups. These policies can focus on creating job opportunities in sectors that absorb large numbers of workers, providing skills development programs to enhance employability, and ensuring fair wages and labour conditions. Meanwhile, policies such as social safety nets, targeted cash transfers, and food security programs could shield the most affected groups during the transitional phase, offering a buffer against economic shocks and helping to stabilize livelihoods until more sustainable growth is achieved.

An inclusive recovery strategy for Syria must focus on supporting micro, small, and medium enterprises (MSMEs), which are crucial to the country’s local economy. Key initiatives should include providing fiscal incentives, facilitating access to affordable credit, and establishing a regulatory environment that encourages business growth. Moreover, collaboration with the Syrian diaspora and the international community will be vital for attracting foreign direct investment (FDI), ensuring that investments align with Syria’s long-term inclusive development goals.

A sustainable and inclusive economic recovery can only be achieved through a transparent and participatory regulatory framework that incorporates inputs from all relevant stakeholders such as labour unions, professional associations, and local businesses. This will promote a recovery process that addresses the needs of the broader population. By fostering inclusive dialogue and ensuring that policymaking reflects the diverse aspirations of all segments of society, Syria can advance its recovery efforts based on participatory principles. This will prevent the concentration of benefits among specific influential groups, a factor that played a key role in the complete collapse of the Assad regime.

Endnotes

[1] United Nations Economic and Social Commission for Western Asia (UNESCWA) (2025) Syria at a Crossroads: Towards a Stabilised Transition. Available at: https://www.unescwa.org/news/syria-crossroads-new-escwa-unctad-report-warns-economic-ruin-pointing-potential-pathways

[2] United Nations Development Programme (UNDP) (2025) The Impact of the Conflict in Syria. Available at: https://www.undp.org/syria/publications/impact-conflict-syria

[3] Central Bank of Syria (2024) Inflation Report for November 2024, Economic Research, General Statistics and Planning Directorate.

[4] United Nations Development Programme (UNDP) (2025) The Impact of the Conflict in Syria. Available at: https://www.undp.org/syria/publications/impact-conflict-syria

[5] Kassioun Newspaper (2025) ٩ ملايين ليرة..الحد الأدنى لتكاليف معيشة الأسرة السورية في بداية ٢٠٢٥. Available at: https://kassioun.org/economic/item/81924-9-2025

About the author:

Zaki Mehchy is a researcher with the Conflict and Civicness Research Group at LSE, a senior consulting fellow at Chatham House and a co-founder of the Syrian Center for Policy Research. His work focuses on development policies. He has conducted research on the socio-economic impact of the crisis in Syria, poverty and multidimensional deprivation, labour force, local governance, and community empowerment.

Further reading: 

Syria’s Economic Transition: From Kleptocracy to Islamic Neoliberalism in a War-Torn Economy

The Role of MSMEs in Syria in Poverty Reduction and Peacebuilding: Challenges and Opportunities