In the attempt to assess the regional economic reverberations echoing out from two years of conflict triggered on October 7, 2023, Syria stands apart as somewhat of an outlier. Given that in the year 2023, the country was not only twelve years deep in civil conflict but had also become a battleground by proxy for battling external nations, it is nearly impossible to separate direct macro-economic impacts of the Gaza war from the economic shocks of over a decade of conflict, out-migration, and a crippling international sanctions regime.
The event that snowballed into far more impactful economic changes, namely the fall of the Bashar al Assad regime, the rise of al- Nusra Front founder and Hay’at Tahrir al Sham leader Abu Mohammad Jolani-turned-President Ahmad al Sharaa, and the partial lifting of the 2019 Caesar Act Sanctions by the US, is separate from but certainly not unrelated to the regional fallout post- October 7. Syria’s astonishing regime shift was spurred by shifting internal and external political conditions. But attempting to trace the steps of which action was orchestrated by which party on which timeline, and as a result of which other event leads one quickly into mirky territory that is speculative at best and can veer towards conspiracy at worst. What is clear is that the weakening of Hezbollah during its war with Israel, particularly in Israel’s open war phase on alleged Hezbollah targets in Lebanon from September-November 2024, weakened the Syrian regime and created opportunity for Assad’s ousting and the fall of his regime during an eleven-day period that culminated on December 8, 2025.
On that day, eleven days after a ceasefire was declared in Lebanon, Israel broke the 1974 Disengagement Agreement and invaded southern Syria from the occupied Golan Heights in a seizure dubbed by Netanyahu as a “temporary buffer zone.” The expanded occupied territory includes the strategic high point of Mount Hermon, or Jabal al Sheikh, which also supplies water to Damascus via the Fijeh spring and Barada river. Both are strategic freshwater sources that moreover dropped to critical lows due to a 2024 drought, resulting in detrimental effects for 70 percent of Damascus water according to an August 2025 drought report by the International Federation of the Red Cross. Nonetheless, the restitution of Jabal al Sheikh to Syrian control seems not to be intended. On November 26, 2025, Israeli Minister of Defense, Yisrael Katz, stated that, “We will not withdraw from Mount Hermon and we will not leave Syria,” and the Israeli prime minister reiterated in February 2025 that “we will not allow Syrian army forces to enter the region south of Damascus.” On top of its seizure of Damascus’ main water source in course of its presumed fortification of its security and economic positions, Israel has been conducting a one-sided air campaign against targets in Syria, which it intensified on December 9, 2025, with approximately 350 airstrikes over a 48-hour period, devastating strategic infrastructure, destroying weapons stockpiles, airbases, missile depots, and naval facilities.
No way to go but up?
Syria’s post-conflict economic outlook is defined by a very weak starting point and a narrow path to recovery. After an estimated 1.5 percent contraction in 2024, Gross National Product (GDP) is projected to grow by just 1 percent in 2025, according to the World Bank’s June 2025 macro-fiscal assessment. This growth is just a drop in the bucket in needing to offset a cumulative GDP loss exceeding 50 percent since 2010. According to this same report, extreme poverty is rising, public services continue to deteriorate, and Gross National Income (GNI) per capita has fallen to roughly $830 USD, placing Syria among the world’s poorest economies.
Although the World Bank estimates a GDP loss of about $800 billion USD over a decade of conflict, the United Nations Development Programme (UNDP)’s February 2025 report on the impact of conflict in Syria estimated an economic and financial loss of $923 billion USD by the end of 2024. The World Bank’s “conservative” estimate for reconstruction costs accumulated between 2014 and 2024 comes to $216 billion USD. The fiscal position is deeply strained: budget deficits hover around 6 percent of GDP and public revenues remain depressed. External public debt, which is unreported but owed primarily to Iran and Russia, has climbed to over 100 percent of GDP, leaving the state with almost no fiscal space. In May 2025, Saudi Arabia and Qatar paid off Syria’s $15.5 million USD outstanding debt to the World Bank, prompting the global finance institution to recommence engagement with Syria. In June 2025, the World Bank approved a $146 million USD grant to rehabilitate Syria’s electricity network.
Entrenched informality, continued security risks, and war-era illicit networks such as the addictive drug trade hinder the revival of formal economic activity and deter private investment. The transitional regime led by President Ahmed al Sharaa has brought both economic optimism as well as a good deal of uncertainty and fear.
Sprees of violent clashes—such as the bloody March 2025 clashes in Latakia between Alawite populations and Sharaa’s transitional government forces that killed around 2000, or the June 2025 suicide bombing at a Damascus church that killed 25—have called into question whether the regime can bring about a positive new chapter for all Syrians. The April 2025 clashes between Syrian forces and members of the Druze community outside Damascus—ignited by what later seemed to be a misunderstanding—and the July 2025 clashes in Latakia between Bedouin tribes, Syrian forces and Druze which resulted in the deaths of over 1000 as reported by the UK-based Syrian Observatory for Human Rights, many of them Druze civilians, were seized as a intervention pretext by Israel, prompting air strikes and statements justifying continued occupation and retaliation.
In May 2025, US President Donald Trump issued a waiver that eased the sanctions imposed by the Caesar Syria Civilian Protection Act of 2019 (which he had signed into law during his first term), and then extended the same waiver during Sharaa’s November 2025 visit to Washington. International investors—particularly multilateral partnerships—have shown a cautious optimism towards embarking on infrastructure rehabilitation projects, while the return of displaced Syrians could expand the labor force and boost domestic consumption. The Syria Report, an economic database for Syria, reported in November 2025 that Syrian Minister of Finance Yisr Barnieh predicts a 12 to 15 percent GDP growth in the next few years.
However, without political stabilization, large-scale reconstruction funding, and structural reforms, the projected recovery will remain shallow, and per-capita income is unlikely to rise meaningfully in the medium term.
The human toll of Israeli escalations and the “Campaign Between Wars”
Since the beginning of the war on Gaza, Israel has escalated their military aggressions in Syria, turning it into a key proxy battleground of Israeli-Iranian confrontation. According to the Syrian Observatory for Human Rights (SOHR), Israel has attacked Syria 104 times between October 10, 2023 and August 15, 2024, many of which targeted military interests linked to Iran and Lebanon-based militias. The attacks targeted military research centers, weapon storages, and Iranian bases, during which 259 combatants were killed and 147 were injured, mostly Iranian-backed Syrian combatants and members of Lebanese resistance group Hezbollah.
One of the major attacks towards the end of 2024 destroyed a missile production factory in Masyaf, on September 8, with 27 reported casualties. The second severe Israeli intrusion in this period was the Palmyra airstrike on November 20, with a recorded death toll of 108 civilians. In July 2025, Israel targeted the Syrian Defense Ministry headquarters in Damascus. Cumulatively, SOHR reported a total of 95 Israeli strikes in Syria from the beginning of 2025 through August, and by November 2025, this number has reached over 1000. Israel’s latest attack as of this writing killed 13 in Beit Jinn on November 28 in an attack purportedly targeting Jamaa al-Islamiya, the Lebanese branch of the Muslim brotherhood, which itself claims is not active outside Lebanon.
Israel’s strategic doctrine of conducting limited targeted operations in Syria, instead of a full-scale war is a part of their well-documented war campaign Mivtzot Bein-Milhamot (MABAM), translated from Hebrew to the ‘campaign between the wars’. Through this strategy of covert and overt operations that hover below the level of full-scale war, Israel tries to degrade the capabilities of its adversaries by attacking targets viewed as operational or military threats.
Even though this campaign reflects a strategy of selected attacks, its economic implications have been major on the economy, disrupting several already fragile sectors.
Given the 2025 convergence of a new, and in economic terms still little-tested government, removal of sanctions that had been crippling the Syrian real economy and legal economy, and a rush of development contracts in critical energy, transport, and trade infrastructure that cannot yet be assessed for their efficacy and resistance to corruption, other distortions and disruptions by armed conflict, outlooks for legitimate developments of strategic economic sectors are mired in uncertainty. Sectors that appear crucial for national development are in the short to medium term agriculture and legal agro-industry, energy, transport, and infrastructure. In the medium to longer term, critical assets to be developed are human capital – through repatriation but more fundamentally through new educational institutions, and digital capacities.
The creation of a tech sector and digital infrastructure, named by Abdulsalam Haykal, the Minister of Communications and Information Technology, Syria’s “Digital Silk Road,” would according to media reports from November 2025 mean deploying a 4,500-kilometer network of fiber-optic lines and submarine cables seeking to establish the country as the Middle East’s alternative international data corridor. The national backbone cost alone is estimated by Haykal at up to $500 million.
No longer Captagon central
For well over a decade, Syrian export revenues have been boosted by, and in recent years largely consisted of, illegal drugs chemically produced from easy-to-synthesize, cheap components. Latest after the beginning of the civil war in Syria, sanctions and economic isolation created a vacuum that fostered the production of fenethylline, a psychostimulant drug that is widely prohibited and best known by the discontinued brand name Captagon. Consumption and production is concentrated in the Middle East region, with major consumption in countries that get supplied by Syrian producers, some of whom were reportedly linked to the state during the rule of Bashar Al Assad.
According to the World Bank’s 2024 report, the total market value of Captagon was between USD 1.9 billion to USD 5.6 billion a year, almost equal to the country’s acknowledged GDP in 2023. Being a minor illegal drug business turned into a pillar of Syria’s Bashar al-Assad war economy, and the production and distribution of Captagon generated USD 1.8 billion a year in revenue, the report states.
However, after the fall of the Assad regime, the reality around Syria’s Captagon empire changed drastically. In June 2025 the new Interior Minister, Anas Khattab, stated that all labs that were responsible for producing Captagon were confiscated and permanently seized. However, Syrian local media reports signal that the trade has not fully ended, but is still actively operating in northern Syria, in the areas that are outside full central control, indicating that it has been fragmented and decentralized rather than eliminated entirely. In March 2025, Iraqi authorities published a statement claiming to have confiscated 1.1 tons of Captagon smuggled into Iraq from Syria through Turkiye.
Thus, while weakened and losing its prominent status as the major former regime-funder, production is still continuing in areas out of state control and smuggling routes remain. Agricultural production and agro-industry, the historic backbone of Syria’s real economy and key sector for growth of legal growth and exports, are targeted for rebuilding after having been massively impaired in more than a decade of internal violence and displacement.
Energy sector lit up by attacks and investments
The energy sector, including production of electricity, is strategic for Syrian reconstruction. After more than 14 years of civil war, internal conflicts, and Israeli aggressions, Syria’s electricity network has collapsed, with most energy infrastructure left in ruins. Syria produces around 2,200 megawatts (MW) of electricity, though its electricity needs come to about 7,000 MW. This has left millions of families dependent on expensive private generators for their essential electricity needs.
In the World Bank’s 2017 ‘The Toll of War’ report, it was stated that nearly two-thirds of water treatment plants and half of all pumping stations had been destroyed. The report proves that the water infrastructure in Syria was already fragile during the civil war, and completely collapsed in recent years. In 2025, the United Nations Development Programme (UNPD) reported that 50 percent of the country’s entire infrastructure has been “destroyed and rendered dysfunctional” due to internal conflicts and Israeli attacks on water sites.
Ghassan Al-Zamel, Syria’s minister of electricity from 2022 to 24, estimated the sector as having suffered direct losses of $40 billion and indirect losses at $80 billion. More than half of the country’s electrical grid has been rendered inoperative through the continuous destruction of power plants and transmission lines. The crisis was intensified by gas and fuel shortages. “The Ministry requires 23 million cubic meters of gas daily but receives only 6.5 million,” he said in a May 2024 interview with Arabic News. As of 2025, major assets including the Alouk Water Station and Tishreen Dam were reported out of service, thus causing a great disruption to water supply.
Having consolidated the electricity ministry and two other ministries into a single entity, the Ministry of Energy, in March of 2025, the Syrian government signed a $7 billion USD electricity deal with a consortium of companies from Qatar, Turkiye, and the US. According to the Ministry of Energy, the deal will see the development of four combined-cycle gas turbine power plants in Deir al Zur, Homs, and Hama, plus a 1000 megawatts solar power project in southern Syria. The agreement is expected to result in 5000 megawatts of capacity for generating electricity from natural gas (80 percent) and solar energy. The following month, the Syria Electricity Emergency Project, the World Bank’s $146 million USD project aimed at rebuilding Syria’s electricity networks and rehabilitating connectivity with Turkiye and Jordan, was approved.
Extraction of oil and gas is a part of Syria’s strategic energy sector that, due to resource degradation or exhaustion, had been diminishing in value long before the country’s internal unrest erupted into civil war. In 2010, before the start of the civil war, the US Energy Information Administration had reported that Syria’s oil and gas sectors had accounted for a fourth of its revenues. From 2010 until 2024, Syria’s oil production dropped by over 75 percent, according to the World Bank’s 2024 fiscal report.
But new signs of life in Syria’s oil production—and international entities who want a share in it—are evident in 2025. According to media reports from November, the Ministry of Energy is stepping up efforts to attract foreign investment, holding discussions with U.S. energy giant Chevron and signing Memorandums of Understanding with ConocoPhillips and US-based gas and Renewable Energy specialist company Novaterra Energy to both rehabilitate existing gas assets and explore new fields. The outreach extends beyond U.S. firms: UAE-based Dana Gas has also signed an MoU for natural-gas exploration, while Serbia’s Elixir Group is positioning itself to enter the phosphate sector. Taken together, these moves reflect Damascus’ push to revive its weakened extractives industry amid prolonged infrastructure damage and ongoing economic strain.
New openings: Tartous Port and Damascus Airport
The sector of aerial and maritime transport is another vital component of Syria’s recovery and development strategy. Even though the rapid regime change caused a fragmented political landscape in the country, it opened new investment opportunities with the goal of stabilizing vital services that were disrupted during times of conflict.
One of these deals is that of the Tartous Port, a deal the Government of Dubai media office called ‘a major milestone’. The 30-year concession deal between Syria and UAE-based company DP World, includes a planned USD 800 million investment, one of the largest investments in Syria in recent years. The agreement was signed in July and DP World commenced activity in November with the transfer of a tugboat.
The country’s other gateway of maritime transport, Latakia, has in May 2025 seen a partnership agreement between French (with Syrian roots) shipping giant CMA CGM and the Syrian state about developing the container terminal in this port that is located some 90 kilometers to the north of Tartous. The agreement, consisting of an initial €30 million investment and a quick follow-up commitment of €200 million agreed on in August, wrote further news through a 20 percent buy-in of Abu Dhabi-owned AD Port. The company will have a 30-year concession as operator of the Latakia container terminal.
Through an international consortium led by UCC Holding, a Qatari-based electricity, concessions and construction company, the General Authority of Civil Aviation in the Syrian Arab Republic signed a $4 billion USD contract in August 2025 for the development, construction, and expansion of the Damascus International Airport. With the participation of Cengiz Insaat of Turkey and Assets Investments of the US, the airport’s capacity is projected to increase to 31 million passengers annually, as reported by online trade publication SaudiGulf Projects. In addition to that, the investment will potentially provide more than 90,000 direct and indirect job opportunities in the fields of construction, engineering, logistic trade, air operations, and hospitality.
Return migration and a slow comeback for education
During the civil war, 6.1 million Syrians fled from the Assad regime according to a December 2024 UNHCR report, while as of 2025, 7.4 million remain internally displaced. Furthermore, the fall of the regime in December 2024, marks a qualitative shift: hundreds of thousands to a million of Syrians have returned to Syria since December 2024. According to UNHCR’s Flash Update from November 8th, 2025, 1.2 million Syrians have returned from outside the country since December 2024, mostly from Turkiye, Lebanon and Jordan, while over 1.9 million internally displaced Syrians have returned to their “places of origin or intended return.” The main cities of return were Aleppo, Damascus, rural Damascus, and Idlib.
In another report conducted by UNHCR summarizing refugee movements in June 2025, records that there have been new arrivals from Syria to Lebanon, indicating there has been waves of migration in both directions, in part due to the waves of violence including the March 2025 Latakia massacres of Syrian Alawites.
Reintegration of returning refugees and exiles is a humongous task that is crucial for the infusion of new skills and vigor into the Syrian economy. The bigger challenge, however, is reengineering and developing educational infrastructures and institutions. In 2025, Syria’s education sector is straining under the compounded weight of infrastructure loss, displacement, and chronic underinvestment. An estimated 4.2 million students returned to classrooms for the 2025–2026 school year, according to reporting on nationwide enrollment trends, yet this recovery masks the scale of structural damage.
Of roughly 19,400 schools that existed before the war, around 7,900 remain partially or completely destroyed, leaving nearly 40 percent of educational facilities unusable. UNICEF estimates that 2.4 million school-age children are still out of school, a figure that underscores the depth of the learning crisis. Despite these gaps, UN agencies have expanded emergency education responses: UNICEF reports supporting 458,000 children in 2025 through formal schooling, accelerated learning, early childhood programs, and catch-up initiatives, while UNESCO training programs have reached more than 600 teachers and school leaders to improve school safety and inclusivity. The result is a sector showing signs of reactivation but still defined by uneven access, inadequate infrastructure, and heavy dependence on international support.
185,000 square kilometers of guarded optimism
Syria’s new chapter is unfolding under extraordinary strain. The fall of the Assad regime created openings for investment, reconstruction, and a reshaping of state institutions, yet these opportunities are repeatedly undercut by persistent external attacks and repeated internal clashes, fragmented governance, and the enduring weight of economic collapse. First-year achievements of the new Damascene government include diplomatic breakthroughs with Arab partner countries, Europe, and the US. First-year cooperation and investment agreements, however, will have to prove their resilience to unfavorable terms of public-private partnerships and multi-decade operator concessions, not to mention the exorbitant challenge of activating international investment and financial lifelines. Whether Syria can shift from survival to genuine reconstruction depends not only on political stabilization and sustained external support, but on its ability to rebuild public trust, restore basic services, and integrate millions of displaced Syrians back into an economy that has been hollowed out for more than a decade.
