Economic Analysis of Syria: Factors Behind the Current Regime Overthrow

10 Dec 2024 by rate3

Syria's economic landscape has been tumultuous over the years, particularly since the onset of conflict. Despite recent claims of economic recovery, the reality remains stark and concerning. In the fourth quarter of 2021, Syria's Gross Domestic Product (GDP) grew by 1.30% compared to the same quarter the previous year. However, when examining the longer trend, Syria has maintained an average GDP annual growth rate of only 3.14% from 1971 until 2021. This average is skewed by an extraordinary peak of 25.00% in 1972 and an unprecedented contraction of -26.30% in 2012, reflecting the intensity of the civil strife. Although the country showed signs of recovery from a recession low of -30% in 2013, the growth is still considerably slow and inadequate for substantial recovery.

Unemployment Rates
Unemployment rates paint a bleak picture. In 2023, the unemployment rate fell slightly to 13.50% from 13.80% in 2022, yet this reflects a troubling trend with average unemployment from 1991 to 2023 sitting at 10.55%. The highest recorded rate was 15.30% in 2020, which starkly contrasts with a mere 8% unemployment rate in 2011 before the conflict escalated. The spike in unemployment may have contributed to the current regime's challenges; however, such unemployment rates are not unique to Syria, as many other developing nations face comparable or even worse figures.

Inflation
Inflation remains another critical economic hurdle. As of April 2024, the inflation rate decreased to 120.40% from 134.60% in March, but this is still severely high compared to historical averages of 16.68% from 1957 to 2024. The peak inflation rate reached an alarming 188.40% in March 2021. While high inflation can destabilize a regime, other countries, such as Argentina, have faced even greater inflationary pressures.

Trade Situation
The trade situation is alarming, with a recorded trade deficit of 17,383,055 SYP million in 2022—the worst on record, far exceeding the historical average of -969,859.98 SYP million. This collapse in trade, particularly in the oil sector since 2019, has severely diminished the regime’s economic base and may have alienated key elite supporters who rely on a stable economic environment.

Current Account and Investment Trends
Furthermore, while Syria posted a Current Account deficit of 170 million USD in 2020, this figure is curious given the context of collapsing exports. The influx of funds into the country grew significantly, indicating that local investors began returning funds, perhaps without anticipating the imminent collapse of the regime.

Taxation Policies
The taxation system has also remained stagnant, with a personal income tax rate of 22%. This tax rate has been relatively unchanged since 2004, leaving little room for relief amidst economic hardships. The government's refusal to adjust taxation in light of high unemployment and declining exports suggests a disconnect between the regime's policies and the pressing needs of the populace. This lack of responsiveness to economic realities may have contributed, albeit slightly, to the regime's current vulnerabilities.

Conclusion
In conclusion, while Syria's economic challenges—slow GDP growth, high unemployment, rampant inflation, record trade deficits, and unyielding taxation—certainly play a role in the regime's fragility and potential overthrow, it's important to recognize that many other nations endure even harsher economic conditions yet remain stable. The complexities of regime stability cannot be attributed solely to economic situations; rather, they encompass a broader spectrum of social, political, and historical factors that also demand examination.