What's next for Syria's devastated economy?

How was Syria's economy ravaged by the civil war?

Syria's economy was worth $67.5 billion (€63.9 billion) in 2011 — the same year that large-scale protests broke out against President Bashar Assad's regime, which sparked a rebel insurgency that escalated into a full-blown civil war. The country was placed 68th among 196 countries in global GDP rankings, comparable to Paraguay and Slovenia.

By last year, the economy had fallen to 129 in the league table, having shrunk by 85% to just $9 billion, according to World Bank estimates. That put the country on par with the likes of Chad and the Palestinian Territories.

Almost 14 years of conflict, international sanctions and the exodus of 4.82 million people  — more than a fifth of the country's population — has taken its toll on what was already one of the poorest nations in the Middle East.

A further 7 million Syrians, more than 30% of the population, remain internally displaced as of December, according to the United Nations Office for the Coordination of Humanitarian Affairs (OCHA).

The conflict has devastated the country's infrastructure, causing lasting damage to electricity, transportation and health systems. Several cities, including Aleppo, Raqqa and Homs, have seen widespread destruction.

The conflict caused a significant devaluation in the Syrian pound, which led to a huge fall in purchasing power.

Last year, the country witnessed hyperinflation — very high and accelerating inflation, the Syrian Center for Policy Research (SCPR) said in a report published in June. The consumer price index (CPI) doubled compared to the previous year.

SCPR said more than half of Syrians were living in abject poverty, unable to secure basic food needs.

The two main pillars of the Syrian economy — oil and agriculture — were decimated by the war. Although tiny compared to other Middle East countries, Syria's oil exports accounted for about a quarter of government revenue in 2010. Food production contributed a similar amount to GDP.

Assad's regime lost control of most of its oil fields to rebel groups, including the self-declared Islamic State (IS) and later Kurdish-led forces.

International sanctions, meanwhile, severely restricted the government's ability to export oil. With oil output reduced to less than an estimated 9,000 barrels per day in regime-controlled areas last year, the country became heavily reliant on imports from Iran.

How quickly can Syria's economy be rebuilt?

Some Syria watchers have warned that it could take nearly 10 years for the country to return to its 2011 GDP level and two decades to be fully rebuilt. They are also concerned that Syria's prospects could worsen in the event of any further political instability.

Before the enormous task of rebuilding damaged cities, infrastructure, oil and agricultural sectors can get underway, more clarity is needed on Syria's incoming administration. 

Hayat Tahrir al-Sham (HTS), a former al-Qaeda-linked group that led the capture of Syria's capital Damascus at the weekend, says it is now working to form a new government. 

However, strict international sanctions on Syria remain in place. HTS is also under international sanctions as part of its designation by the United States and the United Nations as a terrorist organization. Western and Arab nations are concerned that the group may now seek to replace Assad's regime with a hardline Islamist government.

There have been immediate calls for those sanctions to be lifted or eased, but it could take several weeks or months.

Delaney Simon, senior analyst at the International Crisis Group, wrote Monday on X, formerly Twitter, that Syria is "one of the most heavily sanctioned countries in the world," adding that leaving those curbs in place would be like "pulling the rug out from Syria just as it tries to stand."

Without a move to ease those curbs, investors will continue to avoid the war-ravaged nation and aid agencies could be wary of stepping in to provide vital humanitarian relief to the Syrian population.

On Sunday night, US President Joe Biden warned that Syria faced a period of "risk and uncertainty" and that the United States would help where it can.

"We will engage with all Syrian groups, including within the process led by the United Nations, to establish a transition away from the Assad regime toward independent, sovereign" Syria "with a new constitution," he said.

US President-elect Donald Trump, meanwhile, said on this Truth Social network Sunday that Washington should "not get involved."

The Associated Press reported Monday that the Biden administration was weighing whether to delist HTS as a terrorist group, citing two senior White House officials. One of the officials said that HTS would be an "important component" in Syria's near-term future.

European Union spokesman Anouar El Anouni said Monday that Brussels was "not currently engaging with HTS or its leaders full stop" and that the bloc would "assess not just their words but also their actions."

Another priority in Syria's reconstruction is the eastern Deir el-Zour governorate, which holds around 40% of Syria's oil reserves and several gas fields. This province is currently under the control of the US-backed Syrian Democratic Forces (SDF). 

What will happen immediately?

HTS leader Mohammed al-Jolani met overnight into Monday with Assad's former prime minister and vice president to discuss arrangements for a "transfer of power," according to a statement from the group.

After a nationwide curfew was ordered, most stores across Syria remained shut on Monday, but Reuters news agency cited a Syrian central bank source and two commercial bankers as saying that banks would reopen on Tuesday and staff had been asked to return to offices. Syria's currency would continue to be used, the sources said.

The oil ministry called on all employees in the sector to return to their workplaces starting on Tuesday, adding that protection would be provided to ensure their safety.

UN aid chief Tom Fletcher wrote Sunday on X that his agency would "respond wherever, whenever, [and] however we can, to support people in need, including reception centers — food, water, fuel, tents, blankets."

As several European countries said they would pause asylum claims for Syrian nationals, the UN refugee agency, UNHCR, called for "patience and vigilance" on the issue of returning refugees.

Austria went further than most EU states, saying it was preparing an "orderly repatriation and deportation program" for Syrians.

Edited by: Uwe Hessler