A World Bank report described the situation in Syria as “highly volatile,” linking the country’s economic recovery to improved security conditions, institutional stability, the easing of international sanctions, and greater international economic engagement.
According to the report released on Tuesday, October 7, Syria’s economy could grow by 1% this year following an estimated 1.5% contraction in 2024, marking the first slight improvement since 2022.
The Bank noted that the transitional government, which assumed power in December 2024, faces the difficult task of rebuilding confidence in the economy after more than a decade of conflict.
Between 2010 and 2022, Syria’s GDP contracted by 53%, prompting the World Bank to classify the country as “low income” since 2018. The report added that the actual decline might have been deeper than official estimates.
Decline in Tourism, Energy, and Manufacturing
The report explained that sanctions and armed conflict have profoundly reshaped Syria’s economic structure. Tourism, energy, and manufacturing have all declined, while the production and trade of the amphetamine “Captagon” became a major source of income during the rule of the former regime, fueling the war economy.
Syria also lost its former role as a regional oil exporter and has become dependent on imported oil and food, as most local oil fields remain under the control of non-state factions.
Only 9% of Oil Output
The opposition-led military operation spearheaded by the now-dissolved Hayat Tahrir al-Sham in December 2024 resulted in the fall of the former Syrian regime and the transfer of power over roughly 78% of the population and 60% of economic activity to the new transitional government.
Nevertheless, the government currently controls only about 9% of total oil production, with most major fields remaining under the control of the Syrian Democratic Forces (SDF), according to the report.
Although the Syrian pound appreciated by about 29% between November 2024 and August 2025, driven by remittance inflows and the partial easing of sanctions, liquidity shortages persist, alongside restrictions on cash withdrawals, electronic transfers, and delays in public-sector salaries.
High Budget Deficit
The report indicated that food prices have stabilized since early 2025 and even declined year-on-year, thanks to the stronger currency, the removal of military checkpoints, and an influx of low-cost imported goods, mostly from Turkey.
However, the budget deficit remains high at around 6% of GDP, while external public debt stands at about 104%, limiting the government’s capacity for social and economic spending.
Despite a 70% increase in humanitarian funding to Syria during the first half of 2025 compared to the same period in 2024, driven by Turkish support, the overall level of aid remains one-third lower than in 2023, according to the Bank.
Cautious Outlook
The World Bank projects modest growth in 2025, insufficient to offset previous losses, with poverty levels expected to remain high. The report suggested that broader sanctions relief and the reopening of trade routes could stimulate recovery, particularly if energy-sector stability improves and more refugees return.
It added that around 780,000 refugees, about 12% of Syrians abroad, and 1.7 million internally displaced people have returned to their areas since the regime’s fall up to mid-August. While this return poses short-term burdens, it could help boost medium-term growth by increasing labor demand and supply.
$146 Million Grant
On June 25, the World Bank announced the approval of a $146 million grant to help Syria restore reliable and affordable electricity and support the country’s economic recovery.
The Bank stated that its Board of Executive Directors approved the grant through the International Development Association (IDA) under the “Syria Emergency Electricity Project” (SEEP).
The project aims to rehabilitate damaged transmission lines and substations, and provide technical assistance to support the development of the electricity sector and strengthen institutional capacity.
Jean-Christophe Carret, World Bank Director for the Middle East, said that among Syria’s urgent reconstruction needs, restoring the power sector stands out as a critical investment that would improve living conditions, support the return of refugees and internally displaced persons, enable the resumption of services such as water and healthcare, and drive economic recovery.
He added that the “Syria Emergency Electricity Project” represents the Bank’s first step toward scaling up its support for Syria’s path to recovery and development.