- ‘In the next one to two years, Syria’s economy will be … decent. It will not be a catastrophe, at least,’ says Omer Ozkizilcik, a non-resident fellow at the Atlantic Council’s Syria Project

- Syria’s reentry into international financial systems will boost investor confidence and enable greater inflows of remittances and foreign direct investments, says researcher Baraa Khurfan

ISTANBUL

After more than a decade of devastating conflict, Syria’s shattered economy may finally be turning a corner.

With the lifting of international sanctions and increasing global engagement with the new transitional government, cautious optimism is growing among analysts and observers.

“All stars appear to be aligned for Syria’s economy to be revived, but it will definitely take some time,” Omer Ozkizilcik, a non-resident fellow at the Atlantic Council’s Syria Project, told Anadolu.

“In the next one to two years, Syria’s economy will be not good, but it will be decent. It will not be a catastrophe, at least.”

Several factors underpin Ozkizilcik’s outlook, including the return of foreign investments, improved governance under a new administration, and the surprising speed at which international sanctions have been lifted.

“I expect that Syria’s reconstruction will cost less than the UN anticipates,” he said, referring to the figure of $400 billion cited based on UN field studies and assessments.

“The Syrian people are very determined to rebuild their country. There is the will. You have the diaspora, international actors, regional states who want to help Syria, and … sanctions being lifted in a record time, which no one expected so soon.”

Syria’s 13-year civil war left the country economically devastated. Its GDP halved between 2010 and 2020, local agricultural and industrial production collapsed, and dependence on imports surged.

According to estimates from institutions such as the World Bank and International Monetary Fund (IMF), Syria’s GDP stood at $37.1 billion in 2022, $39.5 billion in 2023, and $29.3 billion in 2024 – a stark difference from the pre-war $60 billion in 2010.

GDP per capita similarly dropped from $2,800 in 2010 to $2,100 in 2022 and 2023.

New government, new approach

With the fall of the Assad regime last December and rise of Ahmad al-Sharaa as the president, Syrians are now being encouraged to invest in their country and its rebuilding process.

“The Assad regime was notorious for clientelism, nepotism, and mismanagement,” said Ozkizilcik.

“It appears that the new transitional government is much more capable in governance and managing the economy.”

Unlike the Baathist regime’s economic policies, the transitional government has adopted a liberal market-oriented approach.

“We know that in contrast to the socialist economic approach … an open market policy in terms of economic policies is much more fruitful."

The lifting of Western sanctions by the US, UK, and most recently the EU, has further accelerated Syria’s reintegration into the international economic system.

“With the sanctions removed, there are no obstacles that prevent Syria from being reintegrated into the international economic system and banking system,” Ozkizilcik said.

Many foreign countries and companies, he added, are now able to invest in Syria, which will help rebuild the country and also enable them to make a profit out of these investments.

Role of refugees and diaspora

Syria’s vast diaspora, particularly refugees who gained education and work experience abroad, are now being seen as assets for reconstruction.

“The Syrian refugees have the know-how. They have gained education. They have gained experience in Türkiye, in EU countries,” said Ozkizilcik.

“With them going back or establishing transnational enterprises, the Syrian economy will also revive.”

Baraa Khurfan, a former non-resident fellow at the Tahrir Institute for Middle East Policy (TIMEP), emphasized the need for investments in basic infrastructure.

Approximately 70% of Syria’s infrastructure has been destroyed since 2011, he noted, adding that restoring transportation, electricity, water systems, and healthcare will be essential for restarting economic activity.

Sovereign and private investments

Ozkizilcik argues that foreign investment is indispensable to Syria’s economic recovery, stressing that without it, the country cannot return to its pre-war levels of development.

From Europe to the Arab countries and other regional states, all are interested in investing in Syria, he said, citing recent agreements as signs of renewed international interest.

Among the countries at the forefront of investments are Saudi Arabia, the UAE, Qatar, Türkiye, and European nations such as France, Germany and, probably, Italy, said the analyst.

A French firm, he continued, has signed a contract to construct a new port on Syria’s coast, while the UAE has also signed agreements for naval development and a joint commercial airline.

Qatar is exploring investments in Syria’s aviation and industrial sectors, while Saudi Arabia is involved in setting up a reconstruction fund.

“Türkiye, as a neighboring state, has a huge potential in terms of trade and in terms of know-how capacity with the Syrian refugees it hosts. Working as a natural demographic bridge, Türkiye will be one of the major players,” he asserted.

Last week, Türkiye announced the completion of a natural gas pipeline connection from its southern province of Kilis to Aleppo.

Energy and Natural Resources Minister Alparslan Bayraktar said Türkiye plans to begin gas exports to Syria in June.

“That natural gas will be turned into electricity in power plants in Syria,” he said during a visit to Damascus, adding that Türkiye’s natural gas exports to Syria could reach 2 billion cubic meters annually, with initial deliveries going to Aleppo before expanding to Homs.

According to Ozkizilcik, one particular country whose role in Syria’s reconstruction is being overlooked is China.

“China has sent delegation after delegation to Syria, and China is very much interested in investing in Syria and helping it rebuild – and China has the funds,” he said.

“If it wasn’t for the Trump administration’s recent decision to lift sanctions, we would probably see China dominate the Syrian economy.”

By lifting the sanctions, he continued, US President Donald Trump has prevented this from happening, but China will still be one of the major players and investors in the Syrian economy.

Reintegration into global financial systems

Syria’s reentry into the international banking system marks a significant shift. During Assad’s rule, opaque financial networks and secondary sanctions made investment extremely difficult.

“People could not get in their money, could not get out their money, and Syrians who wanted to do some business in Syria had to rely on untransparent methods in the gray zone between illegal and legal,” Ozkizilcik explained.

Now, with banking channels open, legal investment can flow. The recent repayment of a $15.5 million World Bank debt by Saudi Arabia and Qatar is expected to enable the bank to resume aid and project funding.

“This payment is basically a step to open up the possibility of World Bank investments and World Bank economic aid to Syria,” he said.

IMF Managing Director Kristalina Georgieva also confirmed this week that the fund is prepared to help Syria rebuild and reintegrate globally.

Analyst Khurfan also stressed the significance of Syria’s international reintegration: “It will also boost investor confidence by reducing risks and legal complexities associated with engaging in Syrian markets, and enable greater inflows of remittances and foreign direct investments, crucial for financing reconstruction and economic revival.”

Obstacles ahead

Despite signs of progress, both analysts agree that serious challenges remain in Syria’s road to recovery.

Social reconciliation is one major issue, according to Ozkizilcik.

“The Assad regime pit one minority against the other, one ethnic group against another sectarian group, and there are many animosities between different spheres of the Syrian social spectrum, so social reconciliation will be key,” he explained, praising the new leadership for avoiding revenge and prioritizing institution-building.

Another challenge is Syria’s vulnerability to regional threats and its inability to “protect its sovereignty … against any potential geopolitical risk,” he said.

“Syria cannot do anything if Israel wants to bomb Syria. If we see a change in Iraq and we see Shia militias from Iraq trying to enter and attack, then Syria has very little capacity to protect itself.”

Domestically, Khurfan warns that rebuilding a skilled workforce will be difficult, particularly because of the “severe skill mismatches and education gaps created by years of conflict.”

“Also, market distortions, including persistent monopolies and informal economic networks created during the war, impact markets, affect fair competition and pricing stability,” he said.