Syria's Economic Rebound: Refugees Return and Sanctions Ease

Syria's economy is projected to grow at a rate exceeding the World Bank's estimate of 1% for 2025, driven by the return of approximately 1.5 million refugees following the end of a 14-year civil war. Central Bank Governor AbdulKader Husrieh highlighted this optimism during the Reuters NEXT conference, noting that the influx of returning refugees is expected to significantly boost domestic demand and overall economic activity. Husrieh emphasized that the current economic situation is not accurately reflected in the World Bank's projections, citing the potential impact of repatriated refugees on Syria's gross domestic product (GDP).

Reuters

The Syrian government is working towards reintegrating into the global financial system, particularly following the fall of Bashar al-Assad's regime. Husrieh described the recent easing of U.S. sanctions as a "miracle," with expectations that full repeal could occur by the end of 2025. This change is anticipated to enhance foreign banks' willingness to engage with Syria, thereby restoring confidence in the country's financial landscape. The U.S. Treasury recently extended the enforcement of the Caesar sanctions, but discussions with lawmakers suggest a potential end to these restrictions in the near future.

Reuters

In addition to easing sanctions, Syria is forming new partnerships with international financial institutions, including Visa and Mastercard. Husrieh announced plans to develop a digital payments ecosystem, which would facilitate modern financial transactions within the country. This initiative is part of a broader strategy to stabilize public finances and modernize the financial system after years of economic turmoil.

Syria Eyes Economic Rebound as Sanctions Ease and Refugees Return

Syria is preparing to launch a new currency, which will feature eight denominations and remove two zeroes to restore confidence in the battered Syrian pound. Husrieh indicated that this currency reform, alongside the cessation of central bank financing for government budget deficits, represents a significant step towards financial liberation and economic stability.

Reuters

The central bank's efforts aim to transition from crisis management to a more structured economic framework, with a focus on tightening regulations related to anti-money laundering and counter-terrorism. These reforms are essential for meeting international standards and attracting foreign investment.

Syria Eyes Economic Rebound as Sanctions Ease and Refugees Return

Despite the optimistic outlook, there are concerns regarding the structural weaknesses that persist within Syria's economy. Critics argue that the rapid return of refugees may not be sufficient to overcome the challenges posed by years of conflict and economic mismanagement. Additionally, the timeline for the full repeal of sanctions remains uncertain, which could hinder the pace of recovery and foreign engagement.

Syria Eyes Economic Rebound as Sanctions Ease and Refugees Return

Looking ahead, Syria's economic trajectory will largely depend on the successful implementation of reforms and the lifting of remaining sanctions. The anticipated return of more refugees through 2025 could further accelerate growth, positioning Syria as a potential financial hub in the Levant. However, the country must navigate significant risks and challenges to achieve this goal.

Syria Eyes Economic Rebound as Sanctions Ease and Refugees Return

• “I don't think that reflected the reality of the Syrian economy, because we have, like, 1.5 million refugees coming back. Just calculate what's at the minimum, what such return of refugees could add to GDP,” — AbdulKader Husrieh, Central Bank Governor

Reuters

• “The new currency will be a signal and symbol for this financial liberation,” — AbdulKader Husrieh, Central Bank Governor

Reuters

• “Once this happens, this will give comfort to our potential correspondent banks about dealing with Syria,” — AbdulKader Husrieh, Central Bank Governor

Reuters