Syria’s real GDP likely to contract by 5.5% in 2023 on quake impact, World Bank says

Syria’s real gross domestic product (GDP) is expected to contract by 5.5 per cent in 2023 following the February 6 and February 20 earthquakes that hit the northern and western parts of the country, according to a new World Bank report. Economic growth may contract further if reconstruction progress is slower than expected, given limited public resources, weak private investment and limited humanitarian assistance reaching needy areas , the Washington-based lender said. The cost of physical damage caused by the earthquake is estimated at $3.7 billion, while losses including reduced output in productive sectors, lost revenue and higher operating costs for services are forecast at $1.5 billion, according to the Syria Earthquake 2023 Rapid Damage and Needs Assessment (RDNA) report. That brings the total estimated impact to $5.2 billion , it said. “The recent earthquake exacerbates the already dire consequences of the 12 year-long conflict for the people of Syria ,” said Jean-Christophe Carret, World Bank country director for the Middle East department. “The World Bank hopes that this rapid damage and needs assessment will help inform key players on the needs associated with this disaster and contribute to encourage international response efforts.” The current value of the damaged and destroyed capital stock is estimated at about 10 per cent of GDP, a separate World Bank report said this month. The widespread damage affected four provinces, where about 10 million people live. The death toll from the earthquakes in Turkey and Syria that struck on February 6 exceeded 50,000, including about 6,000 in Syria, officials said last month. About 40,000 Syrians who had fled areas affected by the quakes also returned from Turkey to rebel-held north-western Syria in the two weeks after Turkey eased restrictions on their movements, officials said. Syria’s real GDP contraction is projected to widen by 2.3 percentage points in 2023 because of the earthquakes, on top of an earlier projected contraction of 3.2 per cent in 2023, the World Bank said. The additional contraction is primarily driven by the destruction of physical capital and disruptions in trade activity. Inflation is expected to increase substantially in the country, primarily driven by the reduction in goods available, an increase in transport costs and a rise in overall demand for reconstruction material, the lender said. Housing accounted for 24 per cent of total damages and is the most severely affected sector, followed by transport, environment (the associated clean-up costs) and agriculture, according to World Bank estimates. In terms of losses, the agriculture sector incurred the heaviest toll, accounting for 83 per cent of the total, with the gap in access to food estimated at $1.3 billion. The city of Aleppo topped the list of mostly affected cities with about 60 per cent of total damages, followed by Latakia at 12 per cent, and Azaz at 10 per cent, according to World Bank estimates. “Twelve years of conflict have raised the population’s vulnerability to crises and natural disasters. The earthquake has led to a significant deterioration in humanitarian conditions, particularly at the level of food security and housing precariousness,” the lender said. “Vulnerable segments of the population, such as women, children, the elderly and those with disabilities, as well as the poor, were hit hardest. “Earthquake affected areas were further home to almost 3 million internally displaced people (IDPs) or 50 per cent of Syria’s total IDP population who were already facing severe welfare challenges.” Recovery and reconstruction needs across the six assessed governorates are estimated at $7.9 billion, with needs in the first year following the earthquake estimated at $3.7 billion and at $4.2 billion in the two consecutive years, according to the World Bank. The agriculture sector accounted for the largest needs at 27 per cent, followed by housing at 18 per cent, social protection at 16 per cent and transport at 12 per cent. In the early recovery period, which is up to one year after the earthquake, response efforts should prioritise the most urgent needs, including emergency shelter, food, water and health services, the World Bank said. Over the two following years, efforts should gradually shift towards rebuilding infrastructure and restoring essential services, as well as supporting communities to rebuild their livelihoods and promote sustainable development, it added.

Syria’s real GDP likely to contract by 5.5% in 2023 on quake impact, World Bank says

Growth may contract further if reconstruction progress is slower than expected