Syria

Syria’s economy, rocked by four years of civil war, is shrinking fast with industrial and agricultural output falling, leaving almost two-thirds of the population in extreme poverty.

Extreme poverty is estimated at 54pc of Syria’s population. The International Committee of the Red Cross reports that more than 9m Syrians are in need of urgent assistance, including 6.5m people displaced inside their own country. Some 2m housing units have been totally or partially destroyed during the crisis. The reconstruction cost is estimated between $100bn and $200bn. The IMF has estimated losses at $143.8bn which is equivalent to 246pc of the GDP in fixed prices in 2010.

The conflict has led to business closures and capital flight to neighbouring countries that have seen some major Syrian businesses relocating abroad. At the same time, pro-longed crisis has also dealt a severe blow to tourism that contributed billions of dollars to the government exchequer. Before the crisis, the country witnessed robust investments and fast growth and ranked as the lower middle income group with a GDP of $67bn.

The crisis had dramatically changed the economy’s pre-uprising diversified economy. The IMF estimates a 40pc contraction in GDP since 2011 against 6pc annual growth in the five years prior to the conflict. The country has virtually run out of international reserves, holding a roughly $1-2bn from the more than $18bn it had at the beginning of 2011. Western sanctions imposed on Syria have also slashed its export earnings from oil. Public debt reached 126percent of GDP in 2013 as the country continued to import mainly oil and basic commodities to alleviate shortages.

A UN study reveals that Syria is now the second smallest Arab economy; smaller than Jordan (GDP $35bn), Lebanon ($45bn), and Yemen ($40bn). It is only larger than Bahrain (GDP $28bn). Over the past three years, nominal GDP of Syria has dropped by half from $67bn to $30bn. Almost half of Syria’s 5m labour force is unemployed. The government now gets a mere 14000bpd of crude oil. Gas production is currently estimated at 16.7m cubic meters per day, compared with 24m before the crisis broke out.

The on-going crisis has turned its fourth year with huge economic losses, unprecedented rate of unemployment that has risen to 48.6pc. The recession have swollen budget deficit, with inflation running as high as 70pc last year.

Economists warn the Syrian economy will be further ravaged by ongoing conflict. According to official Syrian estimates, tourism sector has lost $1.5bn and manufacturing has lost $2.2bn since the war began. The World Bank has projected a contraction of 8.6pc in economic growth in 2014.

Even if the conflict ceased now and GDP grew at an average rate of 5pc each year, it is estimated that it would take the Syrian economy 30 years to return to the economic level of 2010.

Libya

Libya

The civil war in Libya since 2011 has plunged the country into a political and economic crisis.

The conflict has left the country and its economy largely divided and in the hands of rebels. Civilians who have fled the unrest in Libya claim that the situation is worse than the violence that toppled former leader Gaddafi in 2011.

After the 2011 civil war/invasion, Libya rapidly ramped up its oil production by more than 1mbpd and doubled its real GDP. That recovery, however, was short lived.

Libya has now almost entirely stopped producing oil as the government has lost control of much of the country to militia fighters.

The economy remains heavily dependent on oil that accounts for more than 95pc of merchandise exports and 90percent of government revenues.

Though rich in natural resources, the economy has been severely hampered through international sanctions and civil war.

Libya holds Africa’s largest proven oil reserves and only about 20pc of the reserves has been explored.

During the civil war, the drop in oil and gas production led to a contraction of real GDP by 62pc.

The rapid economic recovery in 2012 was based on the resumption of hydrocarbon production and exports.

The economy faced major challenges in 2013. Mounting protests and shut downs at major oilfields and export terminals towards the end of last year resulted in oil production decline to well below its long-term average of 1.6mbpd.

As a result, GDP declined sharply by 9.4pc in 2013.

The Libyan Ministry of Economy estimates that oil blockades cost the economy over $10bn in 2013.

The World Bank is predicting an 8pc decline in 2014 against the contraction of 5.3pc last year. Rebel seizure of four terminals in July cost the country more than $14bn in lost revenues.

On a monthly basis, according to the central bank, revenues have plunged from $4.6bn to only $1bn which is quite alarming for a country that imports nearly all of its basic needs, including refined petroleum products, food and other goods and services, at a monthly cost of $3.5bn.

However, Libya still has comfortable reserves at $113bn, compared with $132bn at the beginning of the crisis.

If security conditions continue to deteriorate as political and sectarian tensions deepen in the absence of any political agreement among the various groups and militia, the real GDP would continue to fall, possibly by as much as 15-20 per cent.

The 2014 Libyan conflict is an ongoing civil war among Islamist forces and also their opponents.

The country’s oil industry is at the brink of total collapse as a result of intense fighting between rival militias.

Published in Dawn, Economic & Business, September 1st, 2014