SYRIA ECONOMIC MONITOR The Economic Aftershocks of Large Earthquakes Summer 2023 Syria Economic Monitor The Economic Aftershocks of Large Earthquakes Summer 2023 Middle East and North Africa Region ©2023 International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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TABLE OF CONTENTS List of Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi ‫الملخص التنفيذي‬ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv 1.  The Earthquake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.  The Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.  Recent Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 The Syrian economy was already fragile before the earthquake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 The dire economic situation deteriorated further after the earthquake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 The earthquake disrupted economic activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 The earthquake worsened Syria’s trade balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Currency depreciation and price increases both accelerated after the earthquake . . . . . . . . . . . . . . . . . 13 Price changes varied considerably across regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 The earthquake exacerbated Syria’s severe preexisting challenges with household welfare . . . . . . . . . .18 A weak domestic disaster response is undermining the recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 4.  Outlook and Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Special Focus: Syria Earthquake 2023 Rapid Damage and Needs Assessment . . . . . . . . . . . . . . . . 31 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 iii List of Figures Figure 1 The Earthquake Created Large Human Losses and Physical Damages in the Most Conflict-Affected Areas of the Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Figure 2 The Earthquake Hit Economically Important Areas of Northwestern Syria . . . . . . . . . . . . . . . .3 Figure 3 Conflict Events and Casualties Temporarily Declined after the Earthquake, then Quickly Returned to Previous Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Figure 4 Physical Damage Slowed Economic Activity Immediately after the Earthquake, while Relief Efforts Drove an Uneven Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Figure 5 Mobile-Device Data Show a Nationwide Decrease in Activity Just after the Earthquake, Followed by a Surge in Activity in Northwestern Syria a Month Later . . . . . . . . . . . . . . . . . . . . 9 Figure 6 The Earthquake Damaged Infrastructure and Adversely Affected Oil Production . . . . . . . . . 9 Figure 7 Remotely Sensed Vegetation Indices Suggest that the Earthquake Had a Minimal Direct impact on Crop Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 8 Remotely Sensed Vegetation Indices Show Stable Crop Yields in 2023, with Output Consistent with Previous Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 9 Shipping Activity Came to a Halt after the Earthquake, then Resumed as Aid and Recovery imports Rose, though Exports Remained Very Low . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 10 Cargo-Flight Arrivals Spiked in the Weeks following the Earthquake, while Passenger-Flight Arrivals Declined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 11 After the Earthquake, No Increase in Activity Was Observed at the Syria-Türkiye Border Crossings Approved for Aid Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 12 Smuggling Activity between Lebanon and Syria Temporarily Surged in Response to Widespread Supply Shortages Following the Earthquake . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 13 After the Earthquake, the Exchange Rate Depreciated while Prices Rose . . . . . . . . . . . . . . . 14 Figure 14 Inflation in Syria Reflects Changes in the Parallel, Rather than the Official, Exchange Rate . . 15 Figure 15 Price Changes Varied Substantially across Zones of Control . . . . . . . . . . . . . . . . . . . . . . . . . .16 Figure 16 The Disparities in Prices of Goods Increased following the Earthquake . . . . . . . . . . . . . . . . .16 Figure 17 Variations in Price Changes Across Regions Widened after the Earthquake . . . . . . . . . . . . .17 Figure 18 Following the Earthquake, Rents Rose Nationwide but Fell in Northwest Syria, Possibly Due to Displacement from Disaster-Affected Areas . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 19 Increased Licit and Illicit Fuel Trading is Associated with Lower Prices Along the Fuel Supply Chain in Government-Controlled Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 20 The Earthquake Displaced Large Numbers of People within their Own Communities . . . . .21 Figure 21 Access to Services Has Declined since the Earthquake, Especially in the Most- Affected Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Figure 22 The Earthquake Exacerbated the Severe Welfare Challenges Facing Affected Households, Increasing their Reliance on Coping Strategies . . . . . . . . . . . . . . . . . . . . . . . . . .22 Figure 23 The Post-Disaster Monthly Average of Aid Trucks from Türkiye to Syria Remained Below the 2022 Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Figure 24 Improved Access to Humanitarian Aid Has Been Limited and Brief . . . . . . . . . . . . . . . . . . . . 24 Figure 25 Following the Earthquake, the Availability of Cash and Food Vouchers Increased Substantially in Disaster-Affected Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Figure 26 Following the Earthquake, Arab States Increased Aid to Syria . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Figure 27 The Earthquake Was Most Severe in Opposition-Controlled Areas . . . . . . . . . . . . . . . . . . . . .32 Figure 28 The Housing Sector Experienced the Most Direct Damage, while Agriculture Incurred the Greatest Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 iv THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES Figure 29 Earthquake Damage and Losses Were Concentrated in the Governorates of Aleppo and Idlib and Spread Across Multiple Zones of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 30 Recovery and Reconstruction Needs are Concentrated in the Governorates of Aleppo and Idlib and in the Agriculture and Housing Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 List of Tables Table 1 Sharpley Value Decomposition of Factors Influencing Diesel Prices . . . . . . . . . . . . . . . . . . . . 18 Table 2 Regression Analysis of Diesel Price Variation Across Syrian Regions . . . . . . . . . . . . . . . . . . .19 Table 3 Distribution of IDPs in Affected Areas by Housing Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Table 4 Macroeconomic Outlook Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 List of Boxes Box 1 Recognizing Reality: Is Inflation Driven by Changes in Syria’s Official Exchange Rate or in Its Parallel-Market Rate? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Box 2 Explaining Regional Disparities in Fuel Prices Across Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Box 3 The Regional Normalization of Relations with Syria: Implications of the Jordanian Initiative for the Conflict and the Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29  v LIST OF ABBREVIATIONS AANES Autonomous Administration of North MTI GP Macroeconomics, Trade, and and East Syria Investment Global Practice ACLED Armed Conflict Location Event NDVI Normalized Difference Vegetation Index Database NGOs Non-Governmental Organizations CBS Central Bank of Syria NLR Nighttime Light Radiance CPI Consumer Price Index OCHA Office for the Coordination of DMSP Defense Meteorological Satellite Humanitarian Affairs Program RDNA Rapid Damage and Needs Assessment EVI Enhanced Vegetation Index SDF Syrian Democratic Forces FCV Fragility, Conflict, and Violence SIG Syrian Interim Government GDP Gross Domestic Product SNA Syrian National Army HNAP Humanitarian Needs Assessment SSG Syrian Salvation Government Program SYP Syrian Pound HSOS Humanitarian Situation Overview in Syria UAE United Arab Emirates HTS Hayat Tahrir al-Sham UN United Nations IDPs Internally Displaced Persons US United States ISIS Islamic State of Iraq and Syria US$ United States Dollar LAS League of Arab States VIIRS Visible Infrared Imaging Radiometer MFMod Macroeconomic and Fiscal Model Suite MODIS Moderate-Resolution Imaging WFP World Food Programme Spectroradiometer yoy Year-on-year vii PREFACE T he Syria Economic Monitor is a semi-annual Vicente (Data Scientist), Ghizlane Aqariden (Con- report detailing recent economic develop- sultant), Joanne Matossian (Consultant), Joy Aoun ments in the Syrian Arab Republic and its (Senior Strategy Officer), Holly Krambeck (Pro- near-term outlook. The Syria Economic Monitor is gram Manager, Data Lab), Ibrahim Jamali (Consul- produced by the World Bank’s Macroeconomics, tant), Maria Ruth Jones (Senior Survey Economist), Trade, and Investment Global Practice (MTI GP) in col- Ola Hisou (Consultant), Robert Andrew Marty (Data laboration with the World Bank Data Lab. The report Scientist), Sahiti Sarva (Consultant), Silvia Redaelli describes key features of Syria’s macroeconomic (Senior Poverty Economist), Xinyi Wang (Consultant), policy and situates them in the context of its ongoing and Yahui Zhao (Consultant). Staff from the World civil war. It also presents findings from recent World Bank Data Lab, including Holly Krambeck (Project Bank analytical work on Syria. The Syria Economic Lead), Alejandra Quevedo Cardona, Andres Cham- Monitor is part of a broader effort by the MTI GP to orro, Benny Istanto, Gabriel Stefanini Vicente, Maria better understand economic and social dynamics in Ruth Jones, Sahiti Sarva, and Robert Andrew Marty, countries affected by fragility, conflict, and violence advised on using alternative data to monitor economic (FCV), while reflecting the unique constraints involved activity in Syria and prepared a website entitled, “Sup- in working in an FCV environment. port for World Bank Syria Economic Monitor: Using This third edition of the Syria Economic Moni- Alternative Data to Understand Changing Trends in tor focuses on analyzing the economic impact of the Trade and Economic Activity” (LINK), which informed earthquake and its projected impact on Syria’s eco- the analysis presented in the Syria Economic Monitor. nomic outlook. This edition of the Syria Economic The authors would like to express their gratitude Monitor was prepared by a team comprising Luan to Jean Christophe Carret (Country Director), Eric Le Zhao (Senior Economist, Task Team Leader), Peter Borgne (Practice Manager), Norbert Matthias Fiess Salisbury (Senior Consultant, Co-Editor), Albin Sza- (Lead Economist), Fatima Shah (Country program kola (Consultant), Alejandra Quevedo Cardona (Con- Coordinator), Željko Bogetic ´ (Lead Economist), Nadia sultant), Andres Chamorro (Geographer), Anthony Fernanda Piffaretti (Senior Economist), and Kemoh Biswell (Consultant), Aref Alkrez (Consultant), Ayaz Mansaray (Senior Economist), Kemoh Mansaray Parvez (Lead Disaster Risk Management Special- (Senior Economist), and Zeina Khalil (Senior External ist), Benny Istanto (Consultant), Charl Jooste (Senior Affairs Officer) for their valuable input during the prep- Economist), Enkhzaya Demid (Consultant), Stefanini aration and review process for this report. The team ix is also grateful to Zeina Khalil (Senior External Affairs tations, and conclusions expressed in the Syria Officer), who led the report’s publishing, communica- Economic Monitor are those of individual World Bank tions, and outreach strategy, and to Sean Lothrop staff and do not necessarily reflect the views of the (Consultant), who edited the final version. Special Executive Board of the World Bank or the govern- thanks are due to Ekaterina Georgieva Stefanova ments they represent. (Senior Program Assistant) and Mabel Nomsa Mkhize For more information about the World Bank’s (Program Assistant) for their excellent administrative activities in Syria, or to download a digital copy of this support, and to Abdullah Alruwaishan for the Arabic report, please visit https://www.worldbank.org/en/co​ translation of the Executive Summary. The team is also untry/syria/overview#1. For questions and comments grateful to Robert W. Reinecke, Salem Massalha, and on the content of this publication, please contact Eric Shehab El-Dien for their assistance with the formatting Le Borgne (eleborgne@worldbank.org), Norbert Mat- and design of the report, as well as the video and thias Fiess (nfiess@worldbank.org), and Luan Zhao infographic content produced for its dissemination. (lzhao1@worldbank.org). Media inquiries should be The data cut-off date for this Syria Economic addressed to Zeina Khalil (zelkhalil@worldbank.org). Monitor was June 16, 2023. The findings, interpre- x THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES EXECUTIVE SUMMARY T welve years into a devastating civil war, To better understand these complex a one-in-two-century earthquake devas- dynamics, this edition of the Syria Economic tated northwestern Syria. The 7.6 Richter Monitor focuses on analyzing the economic scale shock was the deadliest in Syria after the one impact of the earthquake and its projected impact that hit Aleppo in 1822. A month after the Febru- on Syria’s economic outlook. Beyond the specific ary 2023 earthquake, the World Bank published a Syria context, we believe this analysis could also Syria Earthquake 2023 Rapid Damage and Needs help fill a gap in the understanding of the impact of Assessment (RDNA)1 that provides a snapshot of the large natural disasters in conflict-affected economies. physical damages caused by the earthquake and This new body of evidence, in turn, would help revisit the country’s recovery needs. Our interest in this edi- policy recommendations in such settings. tion of the Syria Economic Monitor (SEM) is to track recent economic and social developments following The earthquake created large human the earthquake, and assess the economic outlook losses and physical damages in the most and surrounding risks. contested areas of the country Using novel data sources, this Syria Economic Monitor analyzes what happens to a The earthquake severely hit a part of Syria where a conflict-affected economy in the months follow- large share of its population and economic activity ing a large natural disaster. The interactions of two such massive shocks (one natural and the other 1 World Bank. 2023. Syria Earthquake 2023 – Rapid Damage and Needs Assessment. Washington, D.C: man-made) result in dynamics and outcomes that World Bank Group. http://documents.worldbank.org/cu​ are, at times, quite different than those that would rated/en/099093003162314369/P1721710e2b4a60b4​ arise following a natural disaster of equal magnitude 0a5940f0793f8a0d24. absent a conflict setting. But there is limited analysis 2 These include remote data sources, including nighttime of the (post-immediate earthquake) economic impact illumination, shipping-position data, traffic-congestion data, of a large natural disaster in the context of active and aviation statistics, mobile-phone location data, remote- sensing vegetation indices, and conflict-intensity data. The prolonged conflicts. A main reason for this lack of World Bank’s Data Lab has compiled and made this data analysis is the paucity of data in conflict settings, an available on a website called “Support for World Bank Syria issue that we have partially addressed through the Economic Monitor: Using Alternative Data to Understand use of novel data sources, such as big data.2 Changing Trends in Trade and Economic Activity” (LINK). xi were located. The areas experienced strong or higher shipping-position data. Besides, the destruction of levels of impact from the earthquake hosted 6.6 million roads connecting Antakya in Türkiye with the Bab al- Syrians, representing around 31 percent of Syria’s pop- Hawa, the only border crossing into Syria at the time, ulation and 17 percent of its Gross Domestic Product caused delays in delivering humanitarian assistance. (GDP) in 2022, as estimated using nighttime illumina- The earthquake accelerated currency depre- tion. Of the 6.6 million Syrians affected, 4.6 million (70 ciation and consumer price inflation. Following percent) live in areas outside of Syrian government the earthquake, the Syrian pound (SYP) depreciated control. The affected areas also housed approximately by 23 percent against the United States (US) dollar, 3 million Internally Displaced Persons (IDPs), or 46 reaching about SYP 8,800/US$ in the parallel foreign percent of all IDPs in Syria, resulting from the conflict, exchange market in May 2023. Inflation rose by 11 per- with a vast majority (94 percent) living in areas outside cent between January and April 2023,5 as reduced of Syrian government control. access to goods, heightened transportation costs, and The earthquake also severely hit the part increased demand following the influx of foreign aid put of Syria that was the most intensely contested upward pressure on prices. among the belligerents of the more than decade- The earthquake’s impact on prices was not old civil war. In the past three years, from 2020 to equally distributed. Prices rose far more sharply in 2022, 35 percent of conflict-related deaths took place some regions than in others, reflecting the earthquake’s in areas that experienced strong or higher levels of varied and regionally specific effects and highlighting impact from the earthquake. Of those incidents, the fragmented nature of the Syrian economy due to 63 percent occurred in territory beyond the control of the multiple areas of control. As the earthquake dis- the Syrian government. rupted the supply of fuel from Türkiye, fuel prices rose The earthquake caused massive human significantly in earthquake-affected areas in the north- suffering and damages. Approximately 6,000 people west, while the provision of subsidized heating diesel were killed and another 12,000 were injured in Syria. in less-affected government-held areas helped mitigate Initial estimates indicate that the earthquake also dis- local fuel price increases. Rental costs rose even in placed about 600,000 people, adding to the 6.8 million areas that were only moderately affected by the earth- Syrians that were already internally displaced due to the quake, likely due to an influx of people from affected war. In terms of physical impacts, the above-mentioned regions in the northwest. Food prices increased across RDNA estimates the immediate and direct physical the country, but the arrival of food aid eased price pres- damages and losses3 at approximately US$5.2 billion, sures in earthquake-affected areas. equivalent to about 10 percent of Syria’s GDP.4 The preexisting vulnerability of Syrian households has left many ill-equipped to cope with The earthquake had significant the lingering economic impact of the earthquake. socioeconomic impacts, exacerbating Survey results indicate that the adoption of coping preexisting vulnerabilities strategies like selling household items and productive The earthquake caused temporary but widespread 3 Damage refers to the impact on the capital stock and is economic and trade disruptions. Data gathered for quantified as the replacement value of totally or partially this Syria Economic Monitor tracking mobile device destroyed physical assets. Losses represent disruptions activity and nighttime illumination trends reveal a in economic flows as a consequence of the damaged decline in mobility and a nationwide contraction in eco- assets. nomic output in the aftermath of the disaster. Nighttime 4 This estimate does not include second-order economic effects, such as increased labor and materials costs— illumination data tracking gas flaring shows a contrac- these, and other economic costs, are the focus of this tion in oil production. Damage to roads and maritime Syria Economic Monitor. facilities halted shipping and cargo arrivals for at least 5 Consumer price inflation is proxied by the World Food one week following the earthquake, as indicated by Programme’s (WFP) minimum food basket price index. xii THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES assets has increased since the earthquake. Access Internal divisions and a lack of autho- to health services and sanitation has further deterio- rized border crossings hindered humanitarian rated in heavily affected areas since the earthquake. response efforts. Between February and May 2023, Reduced access to those essential services is likely to the monthly average of aid trucks traveling from worsen the ongoing cholera outbreak and expose the Türkiye to Syria remained about 5 percent lower than population to elevated risks from other communicable the monthly average observed in 2022. Despite the diseases. resumption of humanitarian aid, nighttime illumina- tion data show no significant increase in activity at Funding shortfall and humanitarian the Syria-Türkiye border crossings authorized for aid constraints impede response efforts delivery after the earthquake. Response efforts in Syria were delayed and Earthquake undermines Syria’s economic lagged those in Türkiye. According to maritime and outlook cargo flight data, imports rose modestly starting in late February, likely reflecting an influx of humanitar- Real GDP is projected to contract by 5.5 percent ian aid and imports to support post-disaster recovery. in 2023, surpassing the pre-earthquake estimate Meanwhile, increased levels of mobility and nighttime of 3.2 percent. The economy may contract further illumination signaled greater economic activity in if reconstruction efforts fail to meet expectations. March. However, recovery efforts in Syria lagged This risk is heightened by a lack of public resources, those in Türkiye, where activity near the earthquake low levels of private investment, and a combination epicenter increased sharply soon after the disaster, as of physical obstacles and security challenges that evidenced by mobile device data. prevent humanitarian assistance from reaching some Inadequate funding limited response of the affected areas. efforts. Damascus allocated a modest emergency Syria’s enduring conflict is likely to exacer- fund of US$7 million (less than 0.1 percent of GDP). bate the earthquake’s long-term socioeconomic Limited fiscal resources have also constrained the impact, and vice versa. People living in fragility, con- response of authorities in non-regime-held areas. flict, and violence (FCV)-afflicted contexts like Syria’s By May 2023, the United Nations (UN) has received are among the most vulnerable to natural disasters roughly US$1 billion in funding under its Syria when they occur. These contexts not only undermine Earthquake Flash Appeal and Syria Humanitarian disaster preparedness but also pose significant physi- Response Plan. Despite the US$7.1 billion in grants cal barriers, hindering access to disaster-affected areas pledged this year at the Brussels conferences, the and the provision of recovery support. Conflicts and risk of a significant shortfall persists, given that earthquakes both destroy fixed capital and degrade previous rounds allocated only about a third for human capital. This produces large, sustained nega- programming inside Syria. Overall, by May 2023, tive effects on productivity in the longer run. Continued funding still falls considerably short of the US$7.9 bil- monitoring of key economic indicators may provide lion in reconstruction and recovery needs estimated insight into how conflict and natural disasters interact by the World Bank. to influence economic outcomes. Executive Summary xiii ‫الملخص التنفيذي‬ ‫تسبب الزلزال يف خسائر برشية وأرضار مادية كبرية يف أكرث‬ ‫املناطق املتنازع عليها يف البالد‬ ‫ميا تشهد سوريا العام الثاين عرش من حرب أهلية مدمرة‪ ،‬أىت‬ ‫زلزال مل يقع مثله منذ قرنني عىل تدمري شامل غرب البالد‪ .‬كانت‬ ‫الصدمة التي خلفها الزلزال الذي بلغت قوته ‪ 7.6‬درجات عىل‬ ‫ف‬ ‫رضب الزلزال بشدة جزءاً من سوريا يضم نسبة كبرية من السكان‬ ‫مقياس ريخرت هي األكرث دموية يف سوريا بعد الزلزال الذي رضب حلب يف عام‬ ‫والنشاط االقتصادي‪ .‬تأوي املناطق التي ترضرت بشدة من الزلزال ‪6.6‬‬ ‫‪ .1822‬وبعد ميض شهر عىل زلزال شباط‪/‬فرباير ‪ ،2023‬أصدر البنك الدويل‬ ‫مليون سوري‪ ،‬ميثلون حوايل ‪ 31‬باملائة من سكان سوريا و ‪ 17‬باملائة‬ ‫تقريرا ً بعنوان التقييم الرسيع لألرضار واالحتياجات الناتجة عن الزلزال يف‬ ‫من ناتجها املحيل اإلجاميل يف عام ‪ ،2022‬حسب التقديرات باستخدام‬ ‫سوريا لعام ‪ 2023‬الذي قدم ملحة رسيعة عن األرضار املادية الناجمة عن‬ ‫األضواء الليلية‪ .‬ومن بني الـ‪ 6.6‬مليون سوري املترضر‪ ،‬يعيش ‪ 4.6‬مليون‬ ‫الزلزال واحتياجات التعايف يف البالد‪ .‬ينصب اهتاممنا يف هذا العدد من‬ ‫شخص (‪ 70‬باملائة) يف مناطق خارجة عن سيطرة الحكومة السورية‪.‬‬ ‫مرصد االقتصاد السوري عىل تتبع التطورات االقتصادية واالجتامعية األخرية‬ ‫وتأوي املناطق املترضرة أيضاً حوايل ‪ 3‬ماليني شخص من النازحني داخلياً‪،‬‬ ‫يف أعقاب الزلزال‪ ،‬وتقييم التوقعات االقتصادية واملخاطر املحيطة‪.‬‬ ‫أو ‪ 46‬باملائة من إجاميل النازحني داخلياً يف سوريا نتيجة للنزاع‪ ،‬حيث‬ ‫باستخدام مصادر جديدة للبيانات‪ ،‬يقوم مرصد االقتصاد السوري‬ ‫تعيش الغالبية العظمى (‪ 94‬باملائة) يف مناطق خارجة عن سيطرة‬ ‫هذا بتحليل ما يشهده اقتصاد مترضر أصالً من النزاع خالل األشهر التي‬ ‫الحكومة السورية‪.‬‬ ‫تيل كارثة طبيعية كبرية‪ .‬تؤدي تفاعالت هاتني الصدمتني الهائلتني (إحداهام‬ ‫ورضب الزلزال بشدة أيضاً أكرث املناطق املتنازع عليها بشدة‬ ‫طبيعية واألخرى من صنع اإلنسان) إىل ديناميكيات ونتائج تكون‪ ،‬يف بعض‬ ‫بني األطراف املتحاربة يف الحرب األهلية املستمرة منذ أكرث من عقد من‬ ‫األحيان‪ ،‬مختلفة متاماً عن تلك التي قد تنشأ يف أعقاب كارثة طبيعية ذات‬ ‫الزمان‪ .‬ففي السنوات الثالث املاضية‪ ،‬من عام ‪ 2020‬إىل عام ‪ ،2022‬وقع‬ ‫حجم مامثل يف بيئة ال تشهد أي نزاع‪ .‬هناك تحليل محدود لألثر االقتصادي‬ ‫‪ 35‬باملائة من الوفيات املرتبطة بالنزاع يف املناطق التي ترضرت بدرجة‬ ‫(املبارش بعد الزلزال) لكارثة طبيعية كبرية يف سياق النزاعات النشطة‬ ‫وسجلت ‪ 63‬باملائة ن تلك الحوادث‪ ،‬يف مناطق خارجة‬ ‫عالية من الزلزال ‪ُ .‬‬ ‫واملمتدة‪ .‬ويكمن السبب الرئييس لهذا النقص يف التحليل ي يف ندرة البيانات‬ ‫عن سيطرة الحكومة السورية‪.‬‬ ‫املتوفرة يف بيئات تشهد نزاعاً‪ ،‬وهي مشكلة قمنا مبعالجتها جزئياً من خالل‬ ‫تسبب الزلزال يف معاناة إنسانية هائلة وأرضار جسيمة‪ .‬لقي‬ ‫استخدام مصادر جديدة للبيانات‪ ،‬مثل البيانات الضخمة (‪.)Big Data‬‬ ‫حوايل ‪ 6,000‬شخص حتفهم وأصيب ‪ 12,000‬آخرون يف سوريا‪ .‬وتشري‬ ‫من أجل فهم هذه الديناميكيات املعقدة بشكل أفضل‪ ،‬يركز‬ ‫التقديرات األولية إىل أن الزلزال أدى أيضاً إىل نزوح حوايل ‪600,000‬‬ ‫هذا العدد من مرصد االقتصاد السوري عىل تحليل األثر االقتصادي الناجم‬ ‫شخص‪ ،‬إضافة إىل الـ ‪ 6.8‬مليون نازح سوري داخل سوريا أصالً بسبب‬ ‫عن الزلزال وأثره املتوقع عىل التوقعات االقتصادية لسوريا‪ .‬وإىل جانب‬ ‫الحرب‪ .‬أما فيام يتعلق باآلثار املادية‪ ،‬فتشري تقديرات تقرير التقييم‬ ‫السياق املحدد لسوريا‪ ،‬فإننا نعتقد أن هذا التحليل ميكن أن يساعد أيضاً‬ ‫الرسيع لألرضار واالحتياجات املذكور أعاله إىل أن األرضار والخسائر املادية‬ ‫يف سد الفجوة يف فهم أثر الكوارث الطبيعية الكبرية يف االقتصادات املترضرة‬ ‫الفورية واملبارشة بلغت ‪ 5.2‬مليار دوالر أمرييك تقريباً‪ ،‬أي ما يعادل‬ ‫من النزاعات‪ .‬من شأن هذه املجموعة الجديدة من األدلة‪ ،‬بدورها‪ ،‬أن‬ ‫حوايل ‪ 10‬باملائة من الناتج املحيل اإلجاميل لسوريا ‪.‬‬ ‫تساعد يف إعادة النظر يف التوصيات السياساتية يف بيئات مامثلة‪.‬‬ ‫‪xv‬‬ ‫بشكل متواضع ابتداءا ً من أواخر شهر شباط‪/‬فرباير‪ ،‬مام يعكس عىل األرجح‬ ‫كان للزلزال آثار اجتامعية واقتصادية كبرية‪ ،‬مام أدى إىل تفاقم‬ ‫تدفق املساعدات اإلنسانية والواردات لدعم عملية التعايف بعد الكارثة‪ .‬يف‬ ‫أوجه الضعف السائدة مسبقاً‬ ‫الوقت نفسه‪ ،‬أشارت زيادة مستويات حركة النقل واألضواء الليلية إىل زيادة‬ ‫النشاط االقتصادي يف شهر آذار‪/‬مارس‪ .‬مع ذلك‪ ،‬تخلفت جهود التعايف يف‬ ‫تسبب الزلزال يف اضطرابات اقتصادية وتجارية مؤقتة ولكنها واسعة‬ ‫سوريا عن جهود التعايف يف تركيا‪ ،‬حيث زاد النشاط بالقرب من مركز الزلزال‬ ‫النطاق‪ .‬تكشف البيانات التي تم جمعها ألغراض هذا العدد من مرصد‬ ‫بشكل حاد بعد الكارثة بفرتة وجيزة‪ ،‬كام يتضح من بيانات األجهزة املحمولة‪.‬‬ ‫االقتصاد السوري من خالل تتبع نشاط األجهزة املحمولة واتجاهات األضواء‬ ‫عدم كفاية التمويل حد من جهود االستجابة‪ .‬خصصت دمشق‬ ‫الليلية الخاص عن انخفاض يف حركة النقل وانكامش يف الناتج االقتصادي عىل‬ ‫صندوق طوارئ متواضع مبخصص يبلغ ‪ 7‬ماليني دوالر أمرييك (أقل من‬ ‫مستوى البالد يف أعقاب الكارثة‪ .‬تظهر بيانات األضواء الليلية التي ترصد حرق‬ ‫‪ 0.1‬باملائة من الناتج املحيل اإلجاميل)‪ .‬وأدت محدودية املوارد املالية إىل‬ ‫الغاز انكامشاً يف إنتاج النفط‪ .‬وتسببت األرضار التي لحقت بالطرق واملرافق‬ ‫تقييد استجابة السلطات يف املناطق غري الخاضعة لسيطرة النظام‪ .‬بحلول‬ ‫البحرية يف توقف عمليات الشحن ووصول البضائع ملدة أسبوع عىل األقل‬ ‫شهر أيار‪/‬مايو ‪ ،2023‬تلقت األمم املتحدة حوايل مليار دوالر أمرييك‬ ‫عقب الزلزال‪ ،‬وفق ما تظهره بيانات مواقع الشحن‪ .‬إىل جانب ذلك‪ ،‬تسبب‬ ‫كتمويل يف إطار النداء العاجل الخاص بزلزال سوريا وخطة االستجابة‬ ‫تدمري الطرق التي تربط أنطاكيا يف تركيا مبعرب باب الهوى‪ ،‬وهو املعرب الحدودي‬ ‫اإلنسانية يف سوريا‪ .‬عىل الرغم من املنح التي تم التعهد بها هذا العام يف‬ ‫الوحيد إىل سوريا يف ذلك الوقت‪ ،‬يف تأخري إيصال املساعدات اإلنسانية‪.‬‬ ‫مؤمتر بروكسل والبالغة ‪ 7.1‬مليار دوالر أمرييك ‪ ،‬إال أن خطر حدوث عجز‬ ‫أدى الزلزال إىل ترسيع وترية انخفاض قيمة العملة وتضخم أسعار‬ ‫كبري ال يزال قامئاً‪ ،‬بالنظر إىل أن الجوالت السابقة خصصت حوايل الثلث‬ ‫املستهلكني‪ .‬يف أعقاب الزلزال‪ ،‬انخفضت قيمة اللرية السورية بنسبة ‪23‬‬ ‫فقط للربامج داخل سوريا‪ .‬بشكل عام‪ ،‬بتاريخ شهر أيار‪/‬مايو ‪ ،2023‬كان‬ ‫باملائة مقابل الدوالر األمرييك‪ ،‬لتصل إىل حوايل ‪ 8,800‬لرية سورية‪/‬دوالر‬ ‫حجم التمويل ال يزال أقل بكثري من احتياجات إعادة اإلعامر والتعايف‬ ‫أمرييك يف سوق رصف العمالت األجنبية املوازي يف أيار‪/‬مايو ‪ .2023‬وارتفع‬ ‫البالغة ‪ 7.9‬مليار دوالر أمرييك حسب تقديرات البنك الدويل‪.‬‬ ‫التضخم بنسبة ‪ 11‬باملائة بني شهري كانون الثاين‪/‬يناير ونيسان‪/‬أبريل ‪،2023‬‬ ‫أدت االنقسامات الداخلية وعدم وجود معابر حدودية معتمدة‬ ‫حيث أدى انخفاض الوصول إىل السلع‪ ،‬وارتفاع تكاليف النقل‪ ،‬وزيادة الطلب‬ ‫إىل إعاقة جهود االستجابة اإلنسانية‪ .‬بني شهري شباط‪/‬فرباير وأيار‪/‬مايو‬ ‫يف أعقاب تدفق املساعدات الخارجية‪ ،‬إىل زيادة الضغط عىل األسعار‪.‬‬ ‫‪ ،2023‬ظل املتوسط الشهري لحركة شاحنات املساعدات من تركيا إىل‬ ‫مل يكن أثر الزلزال عىل األسعار متساوياً‪ .‬ارتفعت األسعار بشكل حاد‬ ‫سوريا أقل بنحو ‪ 5‬باملائة من املتوسط الشهري الذي تم رصده يف عام‬ ‫يف بعض املناطق أكرث من غريها‪ ،‬مام يعكس تأثريات الزلزال املتنوعة والخاصة‬ ‫‪ .2022‬وعىل الرغم من استئناف املساعدات اإلنسانية‪ ،‬ال تظهر بيانات‬ ‫يف مناطق مختلفة ويربز الطبيعة املجزأة لالقتصاد السوري بسبب مناطق‬ ‫األضواء الليلية زيادة كبرية يف النشاط عرب املعابر الحدودية املعتمدة بني‬ ‫السيطرة املتعددة‪ .‬فيام عطل الزلزال إمدادات الوقود من تركيا‪ ،‬ارتفعت أسعار‬ ‫سوريا وتركيا إليصال املساعدات بعد الزلزال‪.‬‬ ‫الوقود بشكل كبري يف املناطق املترضرة من الزلزال يف الشامل الغريب‪ ،‬يف حني‬ ‫ساعد توفري وقود الديزل املدعوم ألغراض التدفئة يف املناطق األقل ترضرا ً التي‬ ‫الزلزال يقوض التوقعات االقتصادية لسوريا‬ ‫تسيطر عليها الحكومة يف التخفيف من ارتفاع أسعار الوقود املحلية‪ .‬وارتفعت‬ ‫اإليجارات حتى يف املناطق التي ترضرت بدرجة متوسطة جراء الزلزال‪ ،‬عىل‬ ‫من املتوقع أن ينكمش إجاميل الناتج املحيل الحقيقي بنسبة ‪ 5.5‬باملائة‬ ‫األرجح بسبب تدفق السكان من املناطق املترضرة يف الشامل الغريب‪ .‬كام‬ ‫يف عام ‪ ،2023‬متجاوزا ً تقديرات ما قبل الزلزال البالغة ‪ 3.2‬باملائة‪ .‬وقد‬ ‫ارتفعت أسعار املواد الغذائية يف جميع أنحاء البالد‪ ،‬غري أن وصول املساعدات‬ ‫يشهد االقتصاد املزيد من االنكامش إذا فشلت جهود إعادة اإلعامر يف‬ ‫الغذائية خفف من الضغوط عىل األسعار يف املناطق املترضرة من الزلزال‪.‬‬ ‫تلبية التوقعات‪ .‬يتفاقم هذا الخطر بسبب نقص املوارد العامة‪ ،‬وانخفاض‬ ‫تسبب الضعف أو الهشاشة الذي تعاين منه األرس السورية‬ ‫مستويات االستثامرات الخاصة‪ ،‬ومزيج من العقبات املادية والتحديات األمنية‬ ‫أصالً يف جعل الكثري منها غري مهيأة للتكيف مع اآلثار االقتصادية طويلة‬ ‫التي تحول دون وصول املساعدات اإلنسانية إىل بعض املناطق املترضرة‪.‬‬ ‫يف‬ ‫األمد للزلزال‪ .‬تشري نتائج مسوحات إىل أن اعتامد اسرتاتيجيات تك ّ‬ ‫من املرجح أن يؤدي النزاع املستمر يف سوريا إىل تفاقم اآلثار‬ ‫مثل بيع األدوات املنزلية واألصول اإلنتاجية قد زاد منذ وقوع الزلزال‪.‬‬ ‫االجتامعية واالقتصادية طويلة املدى للزلزال‪ ،‬والعكس صحيح‪ .‬فالسكان‬ ‫وازداد تدهور الوصول إىل الخدمات الصحية والرصف الصحي يف املناطق‬ ‫الذين يعيشون يف ظروف هشة تعاين من النزاعات والعنف مثل سوريا‬ ‫املترضرة بشدة منذ وقوع الزلزال‪ .‬ومن املرجح أن يؤدي انخفاض الوصول‬ ‫هم من بني الفئات األكرث عرضة للكوارث الطبيعية عند وقوعها‪ .‬وال تقوض‬ ‫إىل تلك الخدمات األساسية إىل تفاقم تفيش وباء الكولريا املستمر وتعريض‬ ‫هذه الظروف مدى الجهوزية للتعامل مع للكوارث فحسب؛ بل تشكل‬ ‫السكان للمخاطر املتزايدة لألمراض املعدية األخرى‪.‬‬ ‫أيضاً حواجز مادية كبرية وتعيق الوصول إىل املناطق املترضرة من الكوارث‬ ‫وتقديم الدعم لعملية التعايف‪ .‬تؤدي النزاعات والزالزل عىل السواء إىل‬ ‫يتسبب النقص يف التمويل والقيود املفروضة عىل وصول‬ ‫تدمري رأس املال الثابت وإضعاف رأس املال البرشي‪ .‬ينتج عن ذلك آثار‬ ‫املساعدات اإلنسانية يف إعاقة جهود االستجابة‬ ‫سلبية كبرية ومستدامة عىل اإلنتاجية عىل املدى الطويل‪ .‬ميكن أن يوفر‬ ‫الرصد املستمر للمؤرشات االقتصادية الرئيسية فكرة متعمقة حول كيفية‬ ‫تأخرت جهود االستجابة يف سوريا وتخلفت عن جهود االستجابة يف تركيا‪.‬‬ ‫تفاعل النزاعات والكوارث الطبيعية وتأثريها عىل النتائج االقتصادية‪.‬‬ ‫وفقاً للبيانات البحرية وبيانات رحالت الشحن الجوية‪ ،‬ارتفعت الواردات‬ ‫‪xvi‬‬ ‫‪THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES‬‬ 1 THE EARTHQUAKE I n February 2023, a series of earthquakes capita GDP, the World Bank reclassified Syria as a inflicted enormous damage across northern low-income country in 2016. When the earthquake and western Syria. An earthquake measuring struck, more than half of Syria’s pre-conflict population 7.6 on the Richter scale stuck Syria and neighboring had already been displaced, including 6.8 million IDPs Türkiye on February 6. It was followed by significant and 6.7 million refugees abroad. aftershocks and a second, smaller (6.3 Richter These earthquakes’ impact was greatest scale) earthquake on February 20. The February 6 in areas that account for a large share of Syria’s earthquake was the country’s deadliest seismic event population and economic activity. Some 6.6 mil- since an earthquake caused extensive damage to lion Syrians live in areas that experienced strong or large parts of Aleppo and surrounding areas in 1822. higher levels of impact from the earthquake, which The earthquake inflicted a substantial also accounted for around 31 percent of Syria’s popu- human toll on the Syrian side of the border with lation and 17 percent of its GDP in 2022, as estimated Türkiye. Approximately 6,000 people were killed, and using nighttime illumination. Of the 6.6 million Syrians another 12,000 were injured. Notably, nearly 80 per- affected, 4.6 million (70 percent) live in areas outside cent of the fatalities were recorded in areas outside of of Syrian government control. The affected areas also government control.6 housed approximately 3 million IDPs, or 46 percent of The earthquake struck an economy and all IDPs in Syria, resulting from the conflict, with a vast population battered by more than a decade-long majority (94 percent) living in areas outside of Syrian civil war. Since the early 2010s, the conflict has government control (Figure 1 and Figure 2). resulted in large-scale casualties, forced displacement, the destruction of physical capital, and the breakdown 6 As of February 21, 2023, 1,414 deaths and 2,357 injuries of economic networks and value chains. Economic were reported in government-controlled areas. The UN output is now estimated at half the pre-conflict level Health Cluster reported 4,400 deaths and 8,100 injuries recorded in 2010. Due to the dramatic decline in per in Northwest Syria in areas outside of government control. 1 FIGURE 1 • The Earthquake Created Large long-term direct and indirect economic impacts.7, 8 Human Losses and Physical Damages This analysis was completed in the months following in the Most Conflict-Affected Areas of the earthquake. Assessing and responding to the the Country earthquake’s impact would have been challenging Share of population, GDP, IDPs, and conflict-related deaths in affected even if Syria were not in the midst of a 12-year-old civil areas (earthquake intensity VI – strong – or higher), by zones of control war. People living in FCV-afflicted contexts like Syria’s (%) are among the most vulnerable to natural disasters, and their needs are among the hardest to attend to IDPs 3% 29% 1% 13% when disaster strikes.9 FCV contexts degrade disaster Conflict-related 13% 12% 1% 7% preparedness and often pose significant barriers to deaths accessing disaster-affected areas. They also pose Population 9% 14% 1% 6% significant barriers to good analysis of disaster 1% impacts because of a paucity of baseline and post- GDP 10% 3% 4% disaster data gathering capacity.10 Syria, for example, is territorially divided, has witnessed a withering away 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% of institutions, and its data-gathering capacity is Government and allied forces among the lowest in the world. In 2020, Syria ranked Non-state armed groups Syrian democratic forces Turkish armed forces and national army (opposition) 7 As part of its efforts to better understand the inner Source: Satellite images from the US Commerce Department’s Visible Infrared Imaging Radiometer Suite (VIIRS); USGS ShakeMap; Humanitarian Needs Assessment Program workings of FCV economies in, the World Bank has been (HNAP) population and IDP data as of August 2022; Armed Conflict Location Event publishing a semi-annual report, the Syria Economic Database (ACLED); World Bank staff estimates. Monitor, since Spring 2022. See World Bank, 2022. Note: (a) Nighttime illumination, as shown in the chart, are a proxy for GDP in 2022. (b) Earthquake intensity is based on the USGS shakemap version 17, released on April Syria Economic Monitor: Lost generation of Syrians. 14, 2023. (c) The data on conflict-related deaths represents those recorded in the Washington, D.C: World Bank Group. http://documents. ACLED database from 2020 to 2022. worldbank.org/curated ​ / en/099335506102250271/ IDU06190a00a0d128048450​ a 4660ae3b937ae4bd. World Bank, 2023. Syria Economic Monitor: Syria’s These areas are also among those most Economy in Ruins after a Decade-long War. Washington, intensely contested during Syria’s 12-year-old civil D.C: World Bank Group. http://documents.wor​ldbank. war. In the past three years, from 2020 to 2022, 35 per- org/curated/en/099720503172334463/IDU08b76f​ cent of conflict-related deaths took place in areas that 71b0bfa8045db09e8007c3df330e5fe. 8 Since the onset of the conflict in Syria, the World Bank experienced strong or higher levels of impact from the has conducted several analytical works that aimed at earthquake. Of those incidents, 63 percent occurred in better understanding the economic and social impact territory outside the control of the Syrian government. of the Syrian conflict. These are The Toll of War, issued The country’s infrastructure and buildings, in 2017, which documented the economic and social already weakened by years of war, underinvest- impact of the conflict inside Syria, The Mobility of ment, and neglect, were especially vulnerable Displaced Syrians, issued in 2019, which analyzed the spontaneous returns of Syrian refugees to determine to the earthquake. The RDNA, a well-established the key factors that influenced their decisions, and The World Bank assessment tool, provides a snapshot Fallout of War, issued in 2020, which examined the of the economic damage caused by the earthquake human, physical, social, and economic destruction from and the country’s recovery needs. It estimates total the conflict in Syria on the country’s neighbors in the earthquake damages for Syria at $5.2 billion, around Mashreq region. 10 percent of Syria’s GDP, and recovery needs at $7.9 9 Peters, Katie, and Mirianna Budimir. 2016. “When disasters and conflict collide Facts and figures”. billion. Its findings are outlined in the Special Focus Overseas Development Institute, May 2016. https://cdn​ section at the end of this report. .odi.org/media/documents/When_disasters_and_confli​ This edition of the Syria Economic Monitor cts_collide_facts_and_figures.pdf digs deeper into the earthquake’s immediate and 10 Guidance for PDNA in Conflict Situations, UNDP, 2011. 2 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES last among the 146 countries included in the World FIGURE 2 • The Earthquake Hit Economically Bank’s Statistical Capacity Index. Important Areas of Northwestern Syria To overcome these impediments, the Syria Economic Monitor makes use of novel data sources and in-depth, granular analysis of local supply chains. It includes analysis of satellite imagery and remotely sensed infrared nighttime lights and crop yield data; open-source conflict and fatality data; mobile device activity; maritime and air cargo activity; locally gathered pricing data including granular fuel price data; humanitarian surveys; and other data.11 Using statistical and qualitative methods, it explores cross-border trade and smuggling trends, determinants of fuel price and inflation, and trends in access to humanitarian assis- tance. It also provides a detailed picture of an economy recalibrating after a major disaster. Beyond the specific Syria context, this analysis helps fill a gap in the understanding of the impact of large natural disasters in conflict- Source: Satellite images from the US Commerce Department’s VIIRS and the US affected economies. While the RDNA is an important Department of Defense’s Defense Meteorological Satellite Program (DMSP); USGS ShakeMap; World Bank staff estimates. tool used globally by the World Bank in the aftermath Note: (a) Nighttime illumination in 2022, as shown in the chart, are a proxy for economic of natural disasters, it is rarely deployed in long-term activities. (b) Earthquake intensity is based on the USGS shakemap version 17, released on April 14, 2023. conflict settings. There is limited economic analysis of the post-earthquake economic impact of a large natural disaster in the context of an active and pro- an updated economic outlook for Syria, drawing on a longed conflict. The body of evidence outlined in this range of traditional and nontraditional data sources. edition of the Monitor could assist in the development Finally, the Special Focus Section presents key find- of policy recommendations in such settings. ings from the Syria Earthquake 2023 RDNA. The rest of the report is structured as follows. Chapter II traces the recent trends of the con- 11 The World Bank’s Data Lab has compiled and made this flict. Chapter III analyzes recent economic and policy data available on a website called “Support for World developments in Syria, including the government Bank Syria Economic Monitor: Using Alternative Data to initiatives and international aid programs marshaled Understand Changing Trends in Trade and Economic in response to the earthquake. Chapter IV provides Activity” (LINK). The Earthquake 3 2 THE CONFLICT A ceasefire brokered in 2020 halted in the north between Türkiye, its Syrian National Army major hostilities in Syria’s civil war, but (SNA) allies, and Hayat Tahrir al-Sham (HTS) since insecurity and violence remain pervasive March 2023.14 Additionally, Israel increased airstrikes across much of the country. While armed clashes in response to reported Iranian military expansion in and bombings have become less common in recent Syria,15 particularly in the south, further exacerbating years, Syria suffered the 10th highest number of the instability caused by socioeconomic pressures conflict-related fatalities worldwide in 2022.12 Conflict and criminal activity. events were concentrated along front lines dividing government-controlled territory from opposition-con- trolled areas in northwest Syria. Conflict events and casualties temporarily 12 Armed Conflict Location Event Database (ACLED). declined in the wake of the disaster but quickly 2022. https://acleddata.com/. returned to previous levels (Figure 3). Media 13 Crisis Analysis – Syria. 2023. “February ’23 Monthly reports indicate that since February 2023, Islamic Report.” https://ca-syr.org/periodical/february-2023-mo​ State of Iraq and Syria (ISIS) attacks have increased nthly-report. 14 ETANA Syria. 2023. “Syria Military Brief: North-West in the northeast, primarily targeting the Syrian Demo- Syria – 06 April 2023.” https://etanasyria.org/syria- cratic Forces (SDF) aligned with the Autonomous military-brief-north-west-syria-06-april-2023/. Administration of North and East Syria (AANES).13 15 Crisis Analysis – Syria. 2023. “April ’23 Monthly Report.” Media reports also claim that tensions have escalated https://ca-syr.org/periodical/april-2023-monthly-report. 5 Conflict Events and Casualties Temporarily Declined after the Earthquake, then Quickly FIGURE 3 •  Returned to Previous Levels A. Conflict-related events in Syria B. Conflict-related deaths in Syria (#) (#) 250 140 120 200 100 150 80 100 60 40 50 20 0 0 –5 –4 –3 –2 –1 0 1 2 3 4 5 6 7 8 9 10 –5 –4 –3 –2 –1 0 1 2 3 4 5 6 7 8 9 10 Weeks before/after the earthquake Weeks before/after the earthquake Aleppo, Hama, Idleb, and Lattakia Other governorates Source: ACLED; World Bank staff estimates. 6 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES 3 RECENT ECONOMIC DEVELOPMENTS The Syrian economy was already The dire economic situation fragile before the earthquake deteriorated further after the earthquake Syria faced a series of compounding crises even before the earthquake struck. Severe droughts, The earthquake disrupted economic damage to irrigation infrastructure, and an increase activity in input costs since 2021 had limited agricultural production. The country’s wartime economic crisis High-frequency alternative data show a brief was exacerbated by economic instability in neighbor- nationwide decline in economic activity immedi- ing Lebanon and Türkiye, coupled with tighter U.S. ately after the earthquake. An analysis of nighttime sanctions. More than a decade of war had severely illumination, which serves as a proxy for economic out- degraded Syria’s healthcare system, weakening the put in the absence of formal production data, reveals country’s response to a cholera outbreak in mid- 2022. Imports supply about half of oil consumption and about one-third of cereal consumption, and 16 See World Bank, 2023. Syria Economic Monitor: Syria’s elevated commodity prices in the wake of the war Economy in Ruins after a Decade-long War. Washington, on Ukraine weakened Syria’s external position and D.C: World Bank Group. http://documents.worldbank​ fueled inflation.16 In 2022, the Syrian pound depreci- .org/curated/en/099720503172334463/IDU08b76f71​ b0bfa8045db09e8007c3df330e5fe. ated by about 76 percent against the U.S. dollar in the 17 WFP. 2022. “WFP Syria Market Price Watch Bulletin, parallel foreign-exchange market, triggering a surge December 2022”. ReliefWeb, December 31, 2022. https://​ in inflation, and average prices for essential foods reliefweb.int/report/syrian-arab-republic/wfp-syria-market​ rose by 93 percent.17 -price-watch-bulletin-december-2022. 7 FIGURE 4 • Physical Damage Slowed Economic Activity Immediately after the Earthquake, while Relief Efforts Drove an Uneven Recovery A. Change in nighttime illumination, 3 days after the earthquake relative B. Change in nighttime illumination, March 2023 relative to January 2023 to January 2023 Source: Satellite images from the US Commerce Department’s VIIRS; USGS ShakeMap; World Bank staff estimates. Note: The two black lines show locations where the earthquake shaking was (a) strong/very strong/severe - earthquake intensity of VI or above and (b) moderate - earthquake intensity of V. Earthquake shaking is based on the USGS shakemap version 17, released on April 14, 2023. a substantial drop in activity in the days following the kiye show a noticeable surge in activity both in Feb- earthquake. As expected, strongly affected regions in ruary and March, reflecting the extensive rescue and the north and west experienced the biggest decline relief efforts that immediately followed the earthquake in output (Figure 4A). The earthquake damaged road (Figure 5A). A similar surge in activity did not occur infrastructure at the Bab al-Hawa border crossing, in Syria until March (Figure 5B). These data align the sole formal link between Syria and Türkiye, which with anecdotal evidence and financial reporting sug- slowed economic activity and delayed the arrival of gesting that recovery efforts in Syria were slower and critical humanitarian assistance for several days. Data weaker than those in Türkiye. on the movement of internet-connected mobile devices The earthquake damaged infrastructure also show a pronounced decline in output, particularly and caused a decline in oil production. Syria’s in the worst-affected regions (Figure 5A). Economic major oil production facilities are concentrated in the activity, however, also declined in areas less affected central and eastern regions and sustained minimal by the earthquake, possibly due to the psychological damage from the earthquake. However, the coastal impact and uncertainty caused by the disaster. Banias refinery, which processes most of the coun- Economic activity increased in March, try’s imported Iranian crude oil and accounts for likely due to delayed recovery efforts. Nighttime about two-thirds of domestic fuel production, halted illumination increased in key areas of the earthquake- operations for several days. This interruption, coupled affected regions, likely reflecting rescue and recovery with electricity outages, caused a temporary decline efforts. However, illumination declined in other areas, in oil production (Figure 6A). Meanwhile, damage to suggesting a mixed pattern of recovery (Figure 4B). public infrastructure disrupted logistics and supply Mobile-device data show an overall increase in activity chains, increasing the costs of oil production and in March, especially in the earthquake-affected regions distribution. One month after the earthquake, some (Figure 5B). facilities in the northeast—a key center of oil produc- Mobile-device data also indicate that re- tion—continued to operate below pre-earthquake sponse efforts in Syria lagged those in Türkiye. levels, while production at other facilities had Data from close to the earthquake epicenter in Tür- increased (Figure 6B). 8 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES FIGURE 5 • Mobile-Device Data Show a Nationwide Decrease in Activity Just after the Earthquake, Followed by a Surge in Activity in Northwestern Syria a Month Later A. 3 days after the earthquake relative to January 2023 B. March 2023 relative to January 2023 Source: Veraset Movement, https://www.veraset.com; World Bank staff estimates. Note: The assessment of economic activity level involved analyzing the device count from a longitudinal panel of mobility data in each tile at each time period. Z-scores were calculated for specific time periods compared to the January 2023 baseline, providing a statistical measure of the deviation from the mean and allowing for the evaluation of economic activity levels in terms of standard deviations. A lower z-score signifies reduced movement, which is typically associated with decreased economic activity. FIGURE 6 • The Earthquake Damaged Infrastructure and Adversely Affected Oil Production A. Change in nighttime illumination from gas flaring, 3 days after B. Change in nighttime illumination from gas flaring, March 2023 relative the earthquake relative to January 2023 to January 2023 Source: Satellite images from the US Commerce Department’s VIIRS; World Bank staff estimates. Note: Nighttime illumination from gas flaring is commonly used as a proxy for oil production. The gray areas are locations without any gas-flaring sites. The two black lines show locations where the earthquake shaking was (a) strong/very strong/severe - earthquake intensity of VI or above and (b) moderate - earthquake intensity of V. Earthquake shaking is based on the USGS shakemap version 17, released on April 14, 2023. The earthquake had a moderate impact on well as the Afrin dam in the northwest. Key-informant sur- agricultural output. The earthquake’s direct effect on veys indicate that the earthquake damaged agricultural crop production was limited, partly because it happened during the winter season, during a down period in the 18 EBRD. 2023. “Regional Economic Prospects.” https://​ crop cycle.18 Local reports indicated damage to water www.ebrd.com/what-we-do/economic-research-and-da​ infrastructure in Hama and Lattakia governorates, as ta/data/forecasts-macro-data-transition-indicators.html. Recent Economic Developments 9 FIGURE 7 • Remotely Sensed Vegetation Indices Suggest that the Earthquake Had a Minimal Direct Impact on Crop Yields Source: Moderate-Resolution Imaging Spectroradiometer (MODIS), Vegetation Indices; World Bank staff estimates. Note: EVI standardized anomaly is a dimensionless measure that accounts for variations in the mean and standard deviation of the time series data, allowing for a more robust comparison of anomalies across different time periods. The map only shows the crop yield conditions at croplands. equipment and reduced access to agricultural inputs position data suggest that shipping operations halted and water in the affected areas.19 However, the Enhanced completely for one week following the earthquake. Vegetation Index (EVI), a reliable proxy for crop yield, While Syria’s main ports did not suffer significant direct showed no substantial changes in earthquake-affected areas throughout the first four months of 2023 (Figure 7). Rather, the EVI revealed a notable increase in crop yields 19 FAO. 2023. “Syrian Arab Republic – Post-earthquake during the first five months of 2023 compared to the rapid needs assessment on agricultural livelihoods and production in the northwest – Data in Emergencies same period in 2022, when output had been close to its Impact report, April 2023.” Rome, Italy. https://doi.org​ historical low. Overall, crop yields in 2023 were broadly /10.4060/cc5764en. stable and consistent with the average yields observed 20 In the absence of official trade statistics, this analysis uses since the onset of the Syrian conflict (Figure 8). shipping-position data to monitor recent trade activity. Over 80 percent of global merchandise trade by volume The earthquake worsened Syria’s trade is carried by the international shipping industry (United Nations Conference on Trade and Development, 2018). balance Cargo ships are equipped with a device that periodically emits signals containing essential information about the The earthquake caused a temporary decline in vessel’s location, speed, draught, and other relevant maritime trade.20 Estimates based on shipping- data. 10 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES FIGURE 8 • Remotely Sensed Vegetation Indices Show Stable Crop Yields in 2023, with Output Consistent with Previous Years A. Average Normalized Difference Vegetation Index (NDVI) B. Precipitation C. Temperature (z-score) (millimeters) (oC) 0.6 50 35 45 0.5 30 40 35 25 0.4 30 20 0.3 25 20 15 0.2 15 10 0.1 10 5 5 0.0 0 0 0 1 2 3 4 5 6 7 8 9 10 11 12 0 1 2 3 4 5 6 7 8 9 10 11 12 0 1 2 3 4 5 6 7 8 9 10 11 12 Month Month Month 2012–2021 2022 2023 Source: Anomaly Hotspots of Agricultural Production, Joint Research Centre, European Commission; NDVI from MODIS, processed by authors in Google Earth Engine; World Bank staff estimates. Note: NDVI is a satellite-derived proxy of vegetation status, which represents agricultural production to some extent. The standardized anomaly Z-score of the NDVI indicates how many standard deviations the NDVI is from its historical average. The average NDVI is calculated from MODIS images that overlap the agricultural growing season in Syria. damage, the extensive destruction of roads in major 21 Birch, Andrew, and Jessica Leyland. 2023. “The port cities such as Tartous and Lattakia likely contrib- economic and operational impacts in Syria-Turkey uted to the disruption of trade activities. In addition, earthquake zones.” S&P Global Market Intelligence, damaged port infrastructure in Iskenderun and the February 27, 2023. https://www.spglobal.com/marketi​ ntelligence/en/mi/research-analysis/the-economic-and​ temporary interruption of operations at Ceyhan Port in -operational-impacts-in-syriaturkey-earthquake.html Türkiye21 could further hinder trade activity in Syria.22 22 In 2021, according to the UN’s COMTRADE database, Maritime data indicate a significant uptick Türkiye is the top destination of Syria’s exports and in import volume in the weeks after the earth- second largest source of Syria’s imports. FIGURE 9 • Shipping Activity Came to a Halt after the Earthquake, then Resumed as Aid and Recovery Imports Rose, though Exports Remained Very Low A. Port calls B. Deadweight tonnage (Number of port visits per week, all vessel categories) (Total metric tons of cargo per week, all vessel categories, in thousands) 9 140 8 120 7 100 6 5 80 4 60 3 40 2 1 20 0 0 –5 –4 –3 –2 –1 0 1 2 3 4 5 6 7 8 9 –5 –4 –3 –2 –1 0 1 2 3 4 5 6 7 8 9 Weeks before/after the earthquake Weeks before/after the earthquake Imports Exports Source: UN Comtrade Monitor https://comtrade.un.org/data/ais; World Bank staff estimates. Recent Economic Developments 11 FIGURE 10 • Cargo-Flight Arrivals Spiked in the Weeks Following the Earthquake, while Passenger-Flight Arrivals Declined A. Flight payload, arrival into Syria B. Cargo-flight payload, arrival into Syria (Total metric tons per week) (Total metric tons per week) 450 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 –5 –4 –3 –2 –1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 –5 –4 –3 –2 –1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Weeks before/after the earthquake Weeks before/after the earthquake Passenger Cargo Arab countries Domestic Other countries Source: World Bank Global Aviation Dashboard, http://aviation.worldbank.org; World Bank staff estimates. Note: Payload is the combined weight of passengers, cargo, and baggage. quake, likely reflecting an influx of humanitarian FIGURE 11 • After the Earthquake, No Increase in aid and imports to support post-disaster recovery Activity Was Observed at the Syria- Türkiye Border Crossings Approved (Figure 9A and Figure 9B). Policy actions by the for Aid Delivery Central Bank of Syria (CBS) may also have boosted import volumes. Decision 336 on March 14 temporar- Ar Ra’-ee ily allowed traders and importers to purchase imported 150 raw materials directly using their own foreign-currency 100 holdings rather than the official funding mechanisms managed by the CBS. Due to the disruptive effects of 50 the conflict and the imposition of international sanc- 0 tions, exports from Syria remain at extremely low levels. Nov Dec Jan Feb Mar Apr Cargo-flight arrivals increased dramatically Bab al Hawa in the weeks after the earthquake, as emer- 200 gency humanitarian aid poured into the country 150 (Figure 10A). Prior to the earthquake, most cargo 100 destined for Syria originated in Arab countries, includ- 50 ing some transshipped cargo from western countries. 0 In the three weeks following the earthquake, the arrival Nov Dec Jan Feb Mar Apr of humanitarian assistance and rescue teams drove a Bab al-Salam surge in cargo arrivals (Figure 10B), but most incoming 150 cargo still originated from Arab countries. The number of domestic flights also increased, likely due to the trans- 100 portation of aid from Damascus to the affected regions. 50 Nighttime illumination data show no sig- nificant increase in activity at the Syria-Türkiye 0 Nov Dec Jan Feb Mar Apr border crossings authorized for aid delivery after Source: Satellite images from the US Commerce Department’s VIIRS; World Bank staff the earthquake. The destruction of roads connect- estimates. 12 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES FIGURE 12 • Smuggling Activity between Lebanon and Syria Temporarily Surged in Response to Widespread Supply Shortages Following the Earthquake A. Feb 2023 was the month with the largest share of tested locations C. Key locations for cross-border smuggling activity with very intense nighttime illumination (# of tested locations) 45 40 35 30 25 20 15 10 5 0 Jun Sep Nov Dec Jan Feb Mar Apr 2022 2022 2022 2022 2023 2023 2023 2023 B. The ratio of dollarized diesel prices between Syria and Lebanon increased temporarily in early 2023 (Market dollarized prices, January 2021 to April 2023) 800% Ratio of diesel prices (USD) 700% in Syria and Lebanon 600% 500% 400% 300% 200% 100% 0% Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 Source: Syrian Pound Today; Dollar to Lebanese Lira Today; Satellite images from the US Commerce Department’s VIIRS; Tahaleel’s analysis. Note: Very intensive Nighttime Light Radiance (NLR) values represent those are equal to or greater than ten times the median value for the time series. ing Antakya to the Bab al-Hawa border crossing weeks after the earthquake (Figure 12A), as Syrian fuel delayed the flow of humanitarian assistance from prices substantially exceeded dollarized prices in the Türkiye to northwest Syria in the first few days after Lebanese market (Figure 12B). However, the govern- the earthquake. Despite the resumption of humanitar- ment’s distribution of strategic fuel reserves, combined ian aid, nighttime illumination around the Bab al-Hawa with a surge in Iranian oil shipments in the weeks after crossing suggests overall trade activity declined after the earthquake, caused fuel prices to decline in March.23 the earthquake. Likewise, the reopening of the border As arbitrage opportunities dwindled, cross-border activ- crossings at Bab al-Salam and Al Ra’ee in the Aleppo ity quickly returned to normal levels (Figure 12C). governorate for aid delivery did not lead to an increase in overall trade activity at those points (Figure 11). Currency depreciation and price increases Smuggling activity between Lebanon and both accelerated after the earthquake Syria temporarily surged due to widespread sup- ply shortages following the earthquake. Nighttime Following the earthquake, the Syrian pound depre- illumination data can track activity at known smuggling ciated 23 percent against the US dollar in the sites along the Lebanon-Syria border. Activity at these sites had already increased in early 2023 amid mount- 23 The Syria Report. 2023. “Iranian Oil Shipments Remained ing fuel shortages and rising prices on the parallel High in Q1 2023.” April 4, 2023. https://syria-report.com​ market. Cross-border activity increased further in the /iranian-oil-shipments-remained-high-in-q1–2023/. Recent Economic Developments 13 FIGURE 13 • After the Earthquake, the Exchange Rate Depreciated while Prices Rose A. Official and market exchange rates B. Inflation and exchange rates (SYP/US$) (yoy growth, %) 10,000 350 300 8,000 250 6,000 200 150 4,000 100 50 2,000 0 0 –50 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Offical exchange rate for bank transactions SYP/USD market exchange rate CPI inflation Offical exchange rate for inbound remittances CPI inflation: food WFP food basket prices Market exchange rate Source: Syrian Pound Today, https://sp-today.com/en/; WFP Syria Price Database; Central Bureau of Statistics, Syria; World Bank staff estimates. parallel foreign exchange market, reaching about changes in the parallel-market exchange rate rather SYP 8,800/US$ in May 2023. Deteriorating eco- than the official rate (Box 1). nomic conditions in Syria, the strengthening of the US dollar, and the spillover effects of currency devaluation Price changes varied considerably across in neighboring Lebanon and Türkiye drove the depre- regions ciation. In response, the CBS implemented devaluation measures aimed at narrowing the gap between the Significant regional variations in market prices official and parallel-market exchange rates. These mea- and movements were already evident before the sures included a regular devaluation of the exchange earthquake. Both before and after the earthquake, rate for inbound remittances, which was designed to food and fuel prices were lowest in AANES-controlled capture earthquake-related donations by bringing the areas, where most of the country’s food and energy official rate closer to the parallel rate. By the end of are produced. Prices were highest in government- May, the official exchange rate for inbound remittances controlled areas before the earthquake (Figure 15A had reached SYP 8,200/US$. The CBS also devalued and Figure 15B). Prices in SNA-controlled Aleppo and the exchange rate it uses in transactions with private Syrian Salvation Government (SSG)-controlled Idleb banks and financial institutions in early April, setting it occupied the middle ground. at SYP 6,532/US$. This marked the second devalua- Disparities in goods prices increased tion of 2023 (Figure 13A and Figure 13B). following the earthquake. By April 2023, the gap Estimates based on prices for essential between the maximum and minimum food-basket foods indicate that consumer price inflation rose costs across control zones had reached 42 percent, by 11 percent in April 2023.24 Shortages of goods, up from 36 percent the year before. Persistent price rising transportation costs, and the heightened disparities resulted from inadequate connectivity, overall demand following the inflow of foreign aid trade restrictions, and security concerns along major all contributed to rising prices. Although currency domestic trade routes (Figure 16A). Following the depreciation also boosted inflation, the aggressive earthquake, significant disparities in food costs were devaluation of the official exchange rates is unlikely to also observed across governorates (Figure 16B). have significantly increased inflationary pressures on its own. Empirical analysis suggests that since Octo- 24 Consumer price inflation is proxied by the WFP’s ber of 2019, inflation has been primarily influenced by minimum food basket price index. 14 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES RECOGNIZING REALITY: IS INFLATION DRIVEN BY CHANGES IN SYRIA’S OFFICIAL EXCHANGE BOX 1:  RATE OR IN ITS PARALLEL-MARKET RATE? Countries experiencing currency crises often maintain dual or multiple exchange-rate regimes. In such situations, empirical evidence suggests that price levels tend to “recognize reality” by aligning with the parallel exchange rate rather than the official rate.a The parallel foreign exchange market that has operated in Syria since the start of the conflict provides an opportunity to test the “recognizing reality” hypothesis. An exchange rate pass-through regression can assess the statistical relationship between inflation and the official and parallel exchange rates. This technique treats the official and parallel exchange rates as independent variables to establish their respective influences on inflation. The regression formula is: pt – pt–1 = a + b1Derpt + b2Derot + et, where Derpt and Derot denote, respectively, changes in the parallel and official exchange rates. The coefficient b1 shows the response of inflation to the change in the parallel market exchange rate, while the coefficient b2 measures the response of inflation to the change in the official exchange rate.b The results show that the parallel market has been the biggest determinant of inflation in Syria since late 2019. From October 2019 to November 2021, the sensitivity of inflation to the parallel-market exchange rate increased markedly and remained high, whereas the sensitivity of inflation to the official exchange rate approached zero (Figure 14). This stands in contrast to the pre-2018 period, when the official exchange rate was the better predictor of inflation. Assessing the state-dependent response of inflation confirms that changes in the parallel-market exchange rate have been the main driver of inflation since October 2019. c Inflation in Syria Reflects Changes in the Parallel, rather than the Official, Exchange Rate FIGURE 14 •  A. Sensitivity of inflation to the changes in the official B. Sensitivity of inflation to the changes in the parallel market exchange rate exchange rate 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0.0 0.0 –0.2 –0.2 –0.4 –0.4 –0.6 –0.6 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Coefficient Lower bounds Upper bounds Source: Central Bureau of Statistics, Syria; World Bank staff estimates. Note: The graphs provide rolling thirty-month window estimates and 95% confidence intervals of the sensitivity of inflation to the changes in the parallel and official exchange rates using standard exchange rate pass-through regressions à la Carrière-Swallow et al. (2023) and Gopinath, Itskhoki, and Rigobon (2010). a According to Gray (2021), official exchange rates are often not market-clearing, resulting in prices in the economy reflecting the parallel exchange rate. However, Gray's study does not provide empirical evidence to support this hypothesis. Official exchange rates tend to be stronger than the parallel rate, causing demand to exceed supply and preventing the market from clearing at the official rate. b Whereas the main goal of this analysis is to gauge the effects of the changes in the parallel and official market exchange rates on inflation in Syria, estimates of the ERPT for Syria are obtained in a technical note using two different econometric methodologies. The findings also suggest that the degree of exchange rate pass-through in Syria is larger than the average pass-through in lower and middle-income countries. c Data on the Consumer Price Index (CPI) is not available after December 2021. Qualitatively and quantitatively similar results to those reported in the box are obtained when the WFP’s food basket price is used as the price index in lieu of the CPI. After the earthquake, prices rose far more Fuel prices rose significantly in earthquake-affected sharply in some regions than in others, reflecting areas in the northwest due to the disruption of supply the diverse, locally specific shocks caused by the chains from Türkiye, while the provision of subsidized earthquake and subsequent response efforts. heating diesel in less-affected government-held areas Recent Economic Developments 15 FIGURE 15 • Price Changes Varied Substantially Across Zones of Control A. Bread (shop) B. Fuel (diesel) (SYP/kg) (SYP/L) 6,000 10,000 9,000 5,000 8,000 4,000 7,000 6,000 3,000 5,000 4,000 2,000 3,000 1,000 2,000 1,000 0 0 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Government and allied forces Non-state armed groups Syrian democratic forces Turkish armed forces and national army (opposition) Source: WFP Syria Price Database https://dataviz.vam.wfp.org/economic_explorer/prices?adm0=238; World Bank staff estimates. Note: The zones of control are based on Office for the Coordination of Humanitarian Affairs (OCHA) data as of July 10, 2022. FIGURE 16 • The Disparities in Prices of Goods Increased Following the Earthquake A. Food basket price by actor type B. Food basket price by governorate (SYP thousands) (SYP thousands) 800 900 700 800 600 700 500 400 600 300 500 200 400 100 0 300 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 200 100 Government and allied forces Non-state armed groups 0 Syrian democratic forces Turkish armed forces and Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Overall average national army (opposition) Source: WFP Syria Price Database https://dataviz.vam.wfp.org/economic_explorer/prices?adm0=238; WFP Syria Market Price Watch Bulletin; World Bank staff estimates. Note: (a) The standard food basket is a group of essential food commodities. In Syria, the food basket is set at a group of dry goods providing 2,060 kcal a day for a family of five during a month. The basket includes 37 kg of bread, 19 kg of rice, 19 kg of lentils, 5 kg of sugar, and 7 liters of vegetable oil. (b) The zones of control are based on OCHA data as of July 10, 2022. helped ease pressure on fuel prices (Figure 17A). quake-affected people from government-controlled Immediately after the earthquake, food prices surged areas and the northwest drove a surge in housing nationwide.25 However, prices began to decline soon after, possibly due to an increase in food aid to 25 According to the WFP, the nominal prices of key affected households (Figure 17B). commodities in the food basket, comprised of bread, Rents rose on average but fell in northwest lentils, vegetable oil, sugar, and rice, increased by over 10 percent in almost all of the hard-hit governorates of Syria, possibly due to displacement and migration Aleppo, Hama, Idleb, and Lattakia two weeks after the from affected areas. Rents increased significantly earthquake. The prices of food and other essential in northeast Syria, where earthquake damage was commodities also rose in government-held areas that minimal, which may indicate that an influx of earth- were not severely affected by the earthquake. 16 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES FIGURE 17 • Variations in Price Changes Across Regions Widened after the Earthquake A. Fuel (diesel), by earthquake intensity B. Food (bread at shop), by earthquake intensity (SYP/L) (SYP/kg ) 10,000 7,000 9,000 6,000 8,000 7,000 5,000 6,000 4,000 5,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 0 0 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Weak Light Moderate Strong Very strong Source: WFP Syria Price Database https://dataviz.vam.wfp.org/economic_explorer/prices?adm0=238; World Bank staff estimates. Note: Earthquake shaking is based on the USGS shakemap version 17, released on April 14, 2023. FIGURE 18 • Following the Earthquake, Rents Rose Nationwide but Fell in Northwest Syria, Possibly due to Displacement from Disaster-Affected Areas A. Average rental price for a 2-bedroom apartment, by region B. Average rental price for a 2-bedroom apartment, by earthquake intensity (SYP thousands) (SYP thousands) 120 90 80 100 70 80 60 50 60 40 40 30 20 20 10 0 0 Dec 2021 Mar 2022 Apr 2022 Dec 2022 Mar 2023 April 2023 Dec 2021 Mar 2022 Apr 2022 Dec 2022 Mar 2023 April 2023 Full sample Northeast Syria Northwest Syria Light Moderate Strong/Very strong Source: REACH Humanitarian Situation Overview in Syria (HSOS); World Bank staff estimates. Note: (a) Survey data cover non-government-controlled areas of northwestern and northeastern Syria and are collected through key informant interviews at the community level. December 2022 data were used because they contain information on the northeastern and northwestern regions, whereas January 2023 data only includes information on northwestern Syria. (b) Earthquake shaking is based on the USGS shakemap version 17, released on April 14, 2023. demand in the northeast (Figure 18A). Likewise, the Divergent prices and market patterns decline in housing costs in the northwest was likely reflect Syria’s deeply divided economy. With the due to a drop in demand for rental units as large num- exception of the fuel and food trade between the bers of people relocated to other areas (Figure 18B). Syrian government and the AANES, cross-border Humanitarian assistance and reconstruction pro- trade with neighboring states and regional powers grams have also provided some temporary shelters such as Iran, Iraq, Lebanon, and Türkiye has become and other alternative housing options, further contrib- more important to the different zones of control than uting to the decrease in rental prices in the northwest. internal trade with other parts of Syria. Fuel prices Recent Economic Developments 17 are a case in point, as divided territorial control and the affected areas housed approximately 3 million supply chains result in large price disparities (Box 2). IDPs, or 46 percent of all IDPs in Syria (Table 3). In Idleb, nearly two-thirds of the local population was The earthquake exacerbated Syria’s displaced. Most IDPs living in camps were in affected severe preexisting challenges with areas outside of government control.26 household welfare 26 In affected areas under government control, the Prior to the earthquake, the affected areas were large majority of IDPs live in residential areas, either already home to the largest concentration of accommodated in collective shelters, hosted by friends IDPs resulting from the conflict. By August 2022, or relatives, or living in rented accommodations. EXPLAINING REGIONAL DISPARITIES IN FUEL PRICES ACROSS SYRIA BOX 2:  Due to the fragmentation of the Syrian economy, domestic fuel prices vary dramatically across regions. In 2022, diesel prices in Damascus were 3.8 to 8.2 times higher than those in the AANES-controlled city of Hasakeh. The AANES and associated SDF forces in the northeast control most of Syria’s major oil fields, while the Syrian government retains control of the country’s two major refineries. Fuel in the AANES is sourced via a barter and revenue-sharing agreement, under which the AANES supplies crude oil to the government in exchange for refined fuel products. Some fuel is also produced at informal refineries in AANES-controlled areas or sourced from neighboring Iraq. The government, meanwhile, mainly sources crude oil for its refineries from Iran, along with smaller volumes from AANES areas, while smugglers also periodically bring fuel across the border from Lebanon. In Aleppo and Idleb, most fuel is imported from Türkiye, though some lower-quality fuel is also transported from AANES-controlled areas, and there are reports of fuel smuggling from government-controlled areas. To examine the impact of different factors on diesel prices, World Bank staff performed a monthly multiple linear regression analysis using data from February 2020 to April 2023. In this model, the natural logarithm of diesel prices in the local market is the dependent variable, while the natural logarithm of local wages, the distance to a major refinery, and dummy variables representing each control group serve as independent variables. The Sharpley value-decomposition method is used to measure the relative contributions of various factors. The regression equation is defined as follows: Log(diesel) = a + b1 Log(wage) + b2 Distance + b3 Government and allied forces + b4 Non – state armed groups + b5 Turkish – Controlled Forces + et, The coefficient b1 indicates that a 1 percent increase in local wages leads to a b1 percent increase in diesel prices. The coefficient b2 indicates that each 1 km increase in the distance to a refinery is associated with a 100 * b2 percent increase in diesel prices. The coefficient b3 ~ b5 shows that diesel prices in areas controlled by the government and its allies, nonstate armed groups, and Turkish-aligned forces are 100 * b3 percent ~ 100 * b5 percent higher than prices in areas controlled by the SDF. The analysis highlights how zones of control influence fuel prices. TABLE 1 • Sharpley Value Decomposition of Differences in the zone of control account for about 20 percent of Factors Influencing Diesel Prices the observed disparities in diesel prices (Table 1: Sharpley value decomposition of factors influencing diesel prices), likely due to the Shapley value supply-chain dynamics described above. Market factors also play a Factor (estimate) Share in % prominent role in explaining disparities in diesel prices. Areas of Syria Wage 0.594 78.3% with higher daily wage rates, a proxy for local price standards, tend to have higher diesel prices. In addition, greater distances between Distance from the refinery 0.027 3.5% local markets and oil refineries, a proxy for transportation costs, also correlate with higher diesel prices (Table 2). Zones of control 0.139 18.2% Smuggling between the government- and AANES-controlled regions has TOTAL 0.760 100% narrowed but not eliminated the price differences. Deir Ezzor, a node Source: WFP Syria Price Database https://dataviz.vam.wfp.org/economic_explorer/ market in the Syrian government’s fuel supply chain, is located just prices?adm0=238; Satellite images from the US Commerce Department’s VIIRS; south of the AANES-controlled oil fields. Diesel prices in Deir Ezzor are World Bank staff estimates. consistently lower than those in other government-controlled areas (Figure 19A). As trading and smuggling activities intensified in northeast Syria, local fuel prices fell (Figure 19B). Lower diesel prices in Deir Ezzor markets corresponded to higher levels of nighttime illumination in Deir Ezzor and in other key towns along the government’s fuel supply chain (Figure 19B). (continued on next page) 18 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES EXPLAINING REGIONAL DISPARITIES IN FUEL PRICES ACROSS SYRIA (continued) BOX 2:  TABLE 2: REGRESSION ANALYSIS OF DIESEL PRICE VARIATION ACROSS SYRIAN REGIONS (1) (2) VARIABLES Log (diesel) Log (diesel) Log (wage) 1.330*** 1.355*** (0.0217) (0.0169) Distance from the refinery (km) 0.000743*** (0.000109) Government and allied forces 1.577*** (SDF as based group) (0.0418) Non-state armed groups 1.754*** (SDF as based group) (0.0561) Turkish-Controlled Forces 1.396*** (SDF as based group) (0.0705) Constant –4.291*** –6.076*** (0.194) (0.164) Observations 2,568 2,568 R-squared 0.594 0.760 Note: Standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1 a Transportation costs were measured based on the distance between the Homs refinery1 and the markets assessed by WFP using Google Maps.2 1 Refined fuel is distributed from the Homs and Banias refineries and from Hasiyeh, but the distance from the Homs refinery was chosen for model parsimony because it is the central distribution point. 2 Information on the distance and average slope of the route was gathered from Google Earth Pro. Actual distance to refineries may be much larger than Euclidian or shortest- route distance because of roadblocks and longer-than-necessary actual routes. b The zones of control are based on OCHA data as of July 10, 2022. Increased Licit and Illicit Fuel Trading is Associated with Lower Prices Along the Fuel FIGURE 19 •  Supply Chain in Government-Controlled Areas A. Diesel prices B. Smuggling activity and diesel prices (SYP/L) (Nighttime illumination and diesel price ratio one month later) 10,000 7,000 1.4 9,000 6,000 1.2 8,000 7,000 5,000 1.0 6,000 4,000 0.8 5,000 4,000 3,000 0.6 3,000 2,000 0.4 2,000 1,000 1,000 0.2 0 0 0.0 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 Government and allied forces Nighttime illumination in Deir Ezzor Syrian democratic forces Ratio of diesel prices between Deir Ezzor and Deir Ezzor the rest of government-controlled areas (RHS) Source: WFP Syria Price Database https://dataviz.vam.wfp.org/economic_explorer/prices?adm0=238; Satellite images from the US Commerce Department’s VIIRS; World Bank staff estimates Note: The zones of control are based on OCHA data as of July 10, 2022. Recent Economic Developments 19 TABLE 3 • Distribution of IDPs in Affected Areas by Housing Type Share of IDPs in Governorate Non-Camp Camp Total IDPs Total Population Idleb 801,719 997,728 1,799,447 64.7 Aleppo 908,249 331,437 1,239,686 33.2 Hama 100 - 100 0.4 Lattakia 3,015 - 3,015 10.4 Total in affected areas 1,713,083 1,329,165 3,042,248 46.3 Total in Syria 5,199,119 1,437,045 6,636,164 31.5 Source: USGS ShakeMap version 17 and HNAP population data as of August 2022. Note: Geographical mapping of population and intensity is performed at the community level (Admin 4). The table shows the population of interests in communities where earthquake intensity ranked VI (strong) and above. Earthquake-induced displacement increased hold vulnerability, price inflation, and liquidity issues the number of IDPs in Syria by about 10 percent. among financial service providers. While markets have Initial reports suggest that about 34,000 households largely remained operational and resilient, the share were displaced in government-controlled areas,27 of strongly affected communities that reported having while 86,500 households were displaced in northwest- access to markets declined from 97.9 percent in Decem- ern Syria.28 Assuming an average of five members ber 2022 to 96.0 percent in April 2023 (Figure 21C). per household, these figures suggest that about The earthquake has further undermined 600,000 people have been displaced as a direct con- the already precarious welfare of households in sequence of the earthquake, adding to the 6.8 million affected areas, driving some to resort to coping people that had already been internally displaced by strategies. Households based in these areas were the war. In April 2023, survey respondents in 306 of already highly vulnerable and had limited capacity 726 communities in northwest Syria reported residents to cope with the earthquake’s impact. In April 2023, having been displaced within their own community due survey respondents in most communities reported to the earthquake (Figure 20).29 borrowing money (87.5 percent), purchasing goods Access to services deteriorated further in the on credit (76.3 percent), or sending children to work earthquake’s aftermath, particularly in the hard- (60.7 percent) to bolster their income (Figure 22A). est-hit areas. Survey data suggests that significant The adoption of coping strategies such as selling disparities in access to basic services have emerged household items and productive assets has increased across regions.30 While the communities most affected by the earthquake have relatively high rates of access 27 DFS. 2023. “Syria Earthquake February 2023 to health services and sewage connections, both indi- Government-controlled areas, Bi-Weekly Highlights – cators have declined since the earthquake. Among the 21/02/2023.” ReliefWeb, February 21, 2023. https://re​ liefweb.int/report/syrian-arab-republic/syria-earthquake​ most-affected communities, the share that reported -february-2023-government-controlled-areas-bi-weekly-hi​ having access to health services fell from 54.1 per- ghlights-21022023. cent in December 2022 to 50.7 percent in April 2023 28 CCCM Cluster. 2023. “Earthquake Displacement (Figure 21A), while the share that reported being con- Updates – North West Syria (17 February, 2023).” nected to a sewage network declined from 53.6 percent ReliefWeb, February 17, 2023. https://reliefweb.int/map​ to 52.5 percent (Figure 21B). Reduced access to essen- /syrian-arab-republic/earthquake-displacement-updates​ -north-west-syria-17-february-2023. tial services like water, sanitation, and healthcare is likely 29 REACH HSOS. 2023. https://www.reach-initiative.org​ to further worsen the ongoing cholera outbreak and /where-we-work/syria/. expose the population to elevated risks from other com- 30 REACH HSOS. 2023. https://www.reach-initiative.org​ municable diseases. The disaster exacerbated house- /where-we-work/syria/. 20 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES FIGURE 20 • The Earthquake Displaced Large Numbers of People within their Own Communities Source: REACH HSOS, World Bank staff estimates. Note: Data for “IDPs displaced by earthquake” is from the April 2023 HSOS, covering 1,323 communities in Northeast Syria and 782 communities in Northwest Syria. FIGURE 21 • Access to Services Has Declined Since the Earthquake, Especially in the Most-Affected Areas A. Access to health services, by earthquake B. Connected to sewage system, by earthquake C. Access to markets, by earthquake intensity intensity intensity (% of surveyed communities) (% of surveyed communities) (% of surveyed communities) 70 70 100 60 60 99 50 50 98 40 40 97 30 30 96 20 20 10 10 95 0 0 94 Dec Mar Apr Dec Mar Apr Dec Mar Apr Dec Mar Apr Dec Mar Apr Dec Mar Apr 2021 2022 2022 2022 2023 2023 2021 2022 2022 2022 2023 2023 2021 2022 2022 2022 2023 2023 Light Moderate Strong/Very strong Source: REACH HSOS, World Bank staff estimates. Note: Survey data cover parts of northwestern and northeastern Syria outside of government-controlled areas and are collected at the community level through key informant interviews. In each community, between three and five key informants are selected, including members of civil society groups, local charities, local councils, local relief committees, NGOs, or community leaders. Earthquake shaking is based on the USGS shakemap version 17, released on April 14, 2023. Recent Economic Developments 21 FIGURE 22 • The Earthquake Exacerbated the Severe Welfare Challenges Facing Affected Households, Increasing their Reliance on Coping Strategies A. Share of communities per coping strategies residents use to cope with B. Share of communities in which residents were reported purchasing food the lack of income on credit or with borrowed money, by earthquake intensity (%) (%) 100 Purchasing items on credit 95 Borrow money from 90 family or friends 85 Send children 80 to work Sell households 75 productive assets 70 Sell household 65 items or assets 60 0 10 20 30 40 50 60 70 80 90 100 Dec 2021 Mar 2022 Apr 2022 Dec 2022 Mar 2023 Apr 2023 Dec 2022 Mar 2023 April 2023 Light Moderate Strong/Very strong Source: REACH HSOS; World Bank staff estimates. Note: Survey data cover parts of northwestern and northeastern Syria outside of government-controlled areas and are collected at the community level through key informant interviews. In each community, between three and five key informants are selected, including members of civil society groups, local charities, local councils, local relief committees, NGOs, or community leaders. Earthquake shaking is based on the USGS shakemap version 17, released on April 14, 2023. since the earthquake. In heavily affected areas, the Constrained by a lack of fiscal resources, share of communities in which community members the response of the authorities in non-regime were reportedly purchasing food or other items on held areas has been even more limited. The SSG, credit increased from 86.9 percent in December 2022 the de facto authority in Idleb governorate, allocated to 93.4 percent in April 2023 (Figure 22B). US$1.6 million (0.02 percent of GDP) to support res- cue and evacuation operations, rubble transportation, alternative housing provision, and cash and in-kind A weak domestic disaster response is assistance for affected households.34 The Turkish- undermining the recovery backed Syrian Interim Government (SIG) assisted The Syrian government’s response to the earth- 31 Decree No. 3, issued on March 12, offered financial quake was limited. The government mobilized rescue waivers to individuals affected by the earthquake, waiving teams, provided urgent healthcare, established tempo- taxes, fees, and licensing costs for property rehabilitation rary shelters, and supplied emergency food rations in and facilitating bank loans with state-covered interest. government-controlled areas of Aleppo and Lattakia. Additionally, affected individuals were granted a six- month exemption from fees related to unpaid utility bills Damascus allocated a modest emergency fund of and any associated penalties. about US$7 million (less than 0.1 percent of GDP) 32 Crisis Analysis – Syria. 2023. “March ’23 Monthly for response and reconstruction efforts and offered Report.” https://ca-syr.org/periodical/march-2023-mon​ tax relief and other financial waivers to earthquake- thly-report. affected individuals.31 In March 2023, rations of onions, 33 The Syria Report. 2023. “Items Available Through the chickpeas, and lentils were made available through the Smart Card System.” March 14, 2023. https://syria-rep​ ort.com/items-available-through-the-smart-card-system/ government’s smartcard system, along with increased 34 The Syria Report. 2023. “Local Authorities Across Syria access to discounted meat and chicken.32 However, Seek to Respond to Earthquake Crisis.” February 15, the government’s subsidy programs have suffered 2023. https://syria-report.com/local-authorities-across​ from inconsistency and persistent shortages.33 -syria-seek-to-respond-to-earthquake-crisis/. 22 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES the Syrian Civil Defense in search and rescue mis- FIGURE 23 • The Post-Disaster Monthly Average sions, formed a governmental committee to oversee of Aid Trucks from Türkiye to Syria Remained Below the 2022 Average response and aid distribution, and established 40 temporary shelters in Aleppo.35 While these efforts Monthly average number of humanitarian aid trucks crossing from Türkiye to Syria were not trivial, they were far less robust than what (#) might have been expected in an otherwise compa- 1,200 rable, non-conflict-affected country. Non-Governmental Organizations (NGOs) 1,000 and humanitarian partners played a central role 800 in the response to the earthquake. Since February, over 275,000 people in northwest Syria have received 600 emergency tents and nonfood item kits.36 Since 400 the beginning of 2023, UN agencies have provided US$16.5 million in cash assistance to about 500,000 200 people and implemented early recovery interventions 0 such as debris removal and the rehabilitation of 2016 2017 2018 2019 2020 2021 2022 Jan 2023 Feb 2023 Mar 2023 Apr 2023 May 2023 schools, health facilities, and other vital infrastructure.37 Divisions between rival groups complicate Before the earthqake After the earthquake the delivery of humanitarian aid. Although the gov- ernment has approved humanitarian aid shipments to Source: https://response.reliefweb.int/Türkiye -cross-border; World Bank staff estimates. areas outside its control,38 only one aid convoy has, as of mid-June, been able to traverse from government- held territory to the AANES-controlled northeast February and May 2023, 2,394 humanitarian trucks through the Tayha crossing.39 Meanwhile, the various crossed into northwestern Syria, yet the monthly aver- parties to the conflict have impeded the delivery of age following the disasters was about 5 percent below aid to regions held by their rivals. Local media outlets the monthly average observed in 2022 (Figure 23). have accused HTS and SNA factions of obstructing relief efforts by barring government-linked aid organi- zations from entering their territory.40 Border closures and bureaucratic obstacles 35 The Syria Report. 2023. “Local Authorities Across Syria Seek to Respond to Earthquake Crisis.” February 15, hindered the humanitarian response effort. The 2023. https://syria-report.com/local-authorities-across- delivery of humanitarian assistance to areas outside syria-seek-to-respond-to-earthquake-crisis/. of government control relied heavily on border cross- 36 OCHA. 2023. “North-West Syria Situation Report.” ings with Türkiye. Before the earthquake, only one of https://reports.unocha.org/en/country/syria/. the 13 existing border crossings between Türkiye and 37 OCHA. 2023. “North-West Syria Situation Report.” northwestern Syria—Bab al-Hawa, which connects https://reports.unocha.org/en/country/syria/. 38 The Syria Report. 2023. “UN Inaction and Political Idleb governorate with Hatay province—was open for Interests Complicate International Aid Delivery to humanitarian aid deliveries. After the earthquake, a Northwest Syria.” February 14, 2023. https://syria-repo​ first humanitarian convoy entered northwest Syria via rt.com/un-inaction-and-political-interests-complicate-inte​ Bab al-Hawa on February 9, three days after the critical rnational-aid-delivery-to-northwest-syria/. window for rescuing survivors had closed. The delay 39 Crisis Analysis – Syria. 2023. “February ’23 Monthly was primarily due to the damaged roads connecting Report.” https://ca-syr.org/periodical/february-2023-mo​ nthly-report. Gaziantep to the UN Transshipment Hub in Hatay. It 40 Human Rights Watch. 2023. “Northwest Syria: Aid was not until February 14, following authorization from Delays Deadly for Quake Survivors.” February 15, 2023. the Syrian government, that the UN started using addi- https://www.hrw.org/news/2023/02/15/northwest-syr​ tional crossings at Bab al-Salam and Al Ra’ee. Between ia-aid-delays-deadly-quake-survivors. Recent Economic Developments 23 FIGURE 24 • Improved Access to Humanitarian Aid Has Been Limited and Brief A. Residents with access to humanitarian assistance, by earthquake B. IDPs with access to humanitarian assistance, by earthquake intensity intensity (% of surveyed communities) (% of surveyed communities) 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Dec 2021 Mar 2022 Apr 2022 Dec 2022 Mar 2023 Apr 2023 Dec 2021 Mar 2022 Apr 2022 Dec 2022 Mar 2023 Apr 2023 Light Moderate Strong/Very strong Source: REACH HSOS; World Bank staff estimates. Note: Survey data cover parts of northwestern and northeastern Syria outside of government-controlled areas and are collected at the community level through key informant interviews. In each community, between three and five key informants are selected, including members of civil society groups, local charities, local councils, local relief committees, NGOs, or community leaders. Earthquake shaking is based on the USGS shakemap version 17, released on April 14, 2023. Donor funding is insufficient to meet the to receive humanitarian assistance than were less- needs of earthquake-affected communities. By affected communities in the northeast, both prior to May 2023, the UN Syria Earthquake Flash Appeal and following the earthquake. Before the earthquake, had received a total of US$397 million in funding, with about 80 percent of highly affected communities were US$249 million in paid contributions and US$148 mil- already receiving humanitarian assistance. By March, lion in commitments, while the UN Syria Humanitarian access to humanitarian aid had increased for the resi- Response Plan had received US$619 million in fund- dent population while remaining broadly unchanged ing, including US$259 million in paid contributions for IDPs (Figure 24A and Figure 24B). However, the and US$360 million in commitments.41 Part of the improvement in aid access for resident populations funding received comes from the US$1 billion in grants appears to have been temporary, and in April, access pledged to support Syria at the Brussels’ international rates fell from their March peak (Figure 24A). donors’ conference held on March 20, 2023, while The availability of cash and food vouchers, additional grants of US$6.1 billion were committed both for residents and IDPs, increased immedi- during the June 14–15 conference to address Syria’s ately after the disaster. By April 2023, both cash humanitarian crisis. However, previous pledging assistance and food vouchers in disaster-affected rounds in 2021 and 2022 saw only about one-third of grants allocated for programming inside Syria, 41 Syrian Arab Republic 2023 UN Financial Tracking indicating that not all received funds will be directed Service https://fts.unocha.org/countries/218/summary​ towards meeting Syria’s needs.42 Overall, the relatively /2023. large amount of funds raised by May 2023 still falls 42 European Union. 2023. “Supporting Syria and the short of the US$7.9 billion that the World Bank’s RDNA region: Post-Brussels conference financial tracking – estimates will be required to meet Syria’s post-quake Report Fourteen (May 2023)”. ReliefWeb, June 19, 2023. https://reliefweb.int/report/syrian-arab-republic/suppor​ reconstruction and recovery needs. ting-syria-and-region-post-brussels-conference-financial​ Survey data indicate that improved access to -tracking-report-report-fourteen-may-2023. humanitarian aid was short-lived.43 Highly affected 43 REACH HSOS. 2023. https://www.reach-initiative.org​ communities in northwestern Syria were more likely /where-we-work/syria/. 24 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES FIGURE 25 • Following the Earthquake, the Availability of Cash and Food Vouchers Increased Substantially in Disaster-Affected Areas A. Resident access to humanitarian assistance B. IDP access to humanitarian assistance (% of surveyed communities in areas strongly affected by the earthquake) (% of surveyed communities in areas strongly affected by the earthquake) Food Food Health Health WASH WASH Cash Cash Food vouchers Food vouchers Agriculture Agriculture Livelihoods Livelihoods Winterization Winterization Education Education Shelter Shelter NFI NFI 0 2 4 6 8 10 12 14 0 2 4 6 8 10 12 14 16 Dec 2022 Mar 2023 April 2023 Source: REACH HSOS; World Bank staff estimates. Note: Survey data cover parts of northwestern and northeastern Syria outside of government-controlled areas and are collected at the community level through key informant interviews. In each community, between three and five key informants are selected, including members of civil society groups, local charities, local councils, local relief committees, NGOs, or community leaders. areas remained greater than before the earthquake, increased access to cash and food vouchers was resulting in an overall increase in humanitarian assis- offset by decreased direct food aid and water and tance for residents (Figure 25A). However, for IDPs, sanitation services (Figure 25B). Recent Economic Developments 25 4 OUTLOOK AND RISKS P rior to the earthquake, Syria’s GDP was transportation costs. Based on trends observed in the projected to contract by 3.2 percent in first four months of 2023, the World Bank forecasts an 2023; following the earthquake, the antici- 84.2 percent year-on-year (yoy) increase in the mini- pated contraction was revised to 5.5 percent. mum cost of the basic food basket during 2023. Based These estimates were made using the World Bank’s on the historical relationship between food inflation and Macroeconomic and Fiscal Model (MFMod), but they consumer price inflation, the latter is expected to reach are subject to significant uncertainty.44 The earth- quake has reduced the country’s productive capacity, 44 The RDNA estimates earthquake damages for each mainly by damaging physical capital and disrupting sector of the economy. The World Bank’s MFMod trade networks.45 Oil production is predicted to estimates the reduction in real GDP growth caused by remain low in 2023, with adverse effects on industry, damage to the capital stock, the disruption of trade, and while crop production is expected to rebound from the shock to the labor supply due to earthquake-induced the near-historical lows observed in 2022. In parallel, fatalities and injuries. residential property damage and mounting inflation- 45 The baseline scenario assumes that Syria cannot find a close substitute for imports and exports from Türkiye ary pressures caused by the supply-chain shock are in the near term. Trade costs with Türkiye are estimated expected to depress real incomes and exacerbate to increase by about 4 percent after the earthquake. As the contraction in private consumption. While earth- Türkiye accounts for about 40 percent of Syria’s imports quake-related reconstruction efforts46 are expected and about 20 percent of its exports, Syria’s import and to offset some of these losses, the scale and pace export prices are expected to increase by 1.6 percent and 0.8 percent, respectively, in the aftermath of the of the reconstruction remain subject to significant earthquake. uncertainty. 46 The baseline scenario assumes 10 percent of the The earthquake is expected to drive a sub- destroyed capital stock will be rebuilt every year for stantial increase in inflation. High prices are likely to the next ten years and that 50 percent of reconstruction- persist due to disruptions in supply chains and elevated related goods will be imported. 27 Macroeconomic Outlook Indicators TABLE 4 •  (annual % changes unless otherwise indicated) 2018 2019 2020 2021 2022e 2023f Real GDP growth, at constant prices 1.4 1.2 –0.2 1.3 –3.5 –5.5 Inflation (Consumer Price Index) 1.0 13.4 114.2 118.8 60.6 62.1 On-budget fiscal balance (% of GDP) –8.3 –8.1 –8.4 –9.5 –8.4 –8.4 Source: World Bank estimates. Notes: e = estimate, f = forecast. 62 percent yoy in 2023, well above the pre-earthquake launch fresh offensives in AANES-held Manbij and projection of 44 percent (Table 4).47 Tel Rifaat. The earthquake will place only a small Syria’s enduring conflict is likely to exac- additional strain on public finances in the near erbate the earthquake’s long-term socioeco- term. The Syrian government’s fiscal deficit in 2023 nomic impact, and vice versa. People living in is projected to increase slightly to 8.4 percent of GDP FCV-afflicted contexts like Syria’s are among the from the pre-earthquake projection of 8.2 percent of most vulnerable to natural disasters, and their needs GDP. This projection assumes that external aid will are among the hardest to attend to when disaster almost entirely finance the increase in expenditures strikes.48 In such contexts, disaster preparedness necessary to meet the country’s social and infra- is normally degraded, and the presence of ongo- structure needs in the aftermath of the earthquake. ing conflict and violence poses significant barriers Meanwhile, a negligible decline in tax revenues is to reaching disaster-affected areas. The analysis pre- expected, as only a very limited number of large sented in this Monitor highlights how political and corporate taxpayers operate in areas that have been economic fragmentation leads to location-specific severely affected by the earthquake. On the other divergences in outcomes for aid delivery and recov- hand, only a small fraction of the increase in inter- ery efforts. Unlike non-conflict situations, where trade national aid is expected to pass through the Syrian and assistance can be rerouted in the face of access government budget. Risks to the growth outlook are significant and tilted to the downside. The extent and pace 47 Consumer price inflation is estimated to average 60.6 percent yoy in 2022 and 62.1 percent yoy in of earthquake-related reconstruction remain highly 2023, assuming that: (a) the relationship between the uncertain, as both hinge on inflows of external aid. WFP minimum food basket price and food inflation The economy may contract further if the reconstruc- before 2022 remains stable, as does the relationship tion process is slower than expected, and limited between food inflation and overall inflation over the public resources, weak private investment, and con- same period; and (b) the cost of the WFP’s minimum straints on humanitarian assistance reaching the food basket increased by 82.4 percent yoy in 2022 and is expected to rise by 84.2 percent yoy in 2023, affected areas all increase this risk. Syria’s low level of with the 4.8 percent average monthly growth rate preparedness for the earthquake and limited coping observed in the first four months of 2023 extrapolated mechanisms are expected to further hinder recon- for the rest of the year. struction and recovery efforts. 48 For the period 2004–2014, some 58 percent of disaster The likelihood of renewed fighting remains deaths worldwide happened in the 30 most fragile and substantial. The political process remains stalled, conflict-affected states, identified based on the Fragile States Index, according to Peters, Katie, and Mirianna and key conflict parties may still attempt to shift the Budimir. 2016. “When disasters and conflict collide: territorial status quo. Furthermore, tensions between Facts and figures”. Overseas Development Institute, May Türkiye and the AANES remain high, with Turkish offi- 2016. https://cdn.odi.org/media/documents/When_dis​ cials reiterating their intentions in 2022 to potentially asters_and_conflicts_collide_facts_and_figures.pdf. 28 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES challenges caused by natural disasters, many FCV initiative that would increase aid delivery from LAS contexts, like Syria’s, lack alternative routes due to countries in exchange for the Syrian government’s ongoing conflict dynamics.49 Furthermore, both con- cooperation in facilitating the return of refugees and flicts and earthquakes destroy fixed capital and combating the regional drug trade (Box 3). Continued degrade human capital through disruptions in edu- efforts at normalization could increase trade, invest- cation services and psychological trauma. This ment, and foreign assistance in government-controlled produces large, sustained negative effects on pro- areas. However, many nations remain opposed to ductivity in the longer run. Continued monitoring of normalization and especially to the resumption of key economic indicators may provide insight into trade with the Syrian government, limiting the upside how conflict and natural disasters interact to influ- potential of normalization. Moreover, any gains would ence economic outcomes. be limited to government-controlled areas. While Syria’s circumstances remain dire, there are upside risks to the outlook. Economic conditions may improve in government-held areas if 49 Opposition-controlled areas in northwest Syria were not initially able to replace cross-border imports or aid the gradual normalization of Syria’s diplomatic and from Turkey because the main connecting route was commercial relations with its regional neighbors temporarily blocked, and the only other road route continues. Syria was readmitted to the League of runs through frontlines connecting to the government- Arab States (LAS) in May 2023 as part of a Jordan-led controlled areas. THE REGIONAL NORMALIZATION OF RELATIONS WITH SYRIA: IMPLICATIONS OF BOX 3:  THE JORDANIAN INITIATIVE FOR THE CONFLICT AND THE ECONOMY Efforts to normalize relations between Syria and its Arab neighbors gained traction in May 2023 with Syria’s readmission into the LAS.a In 2011, amid escalating state-led violence in Syria, most Arab states severed relations with the Syrian government. The LAS suspended Syria’s membership in November 2011 and imposed sanctions on Damascus. Nevertheless, in recent years, regional governments have taken tentative steps towards normalizing relations, as exemplified by the reopening of the United Arab Emirates (UAE) embassy in Damascus in 2018 and the gradual restoration of diplomatic ties by several other Arab states. The earthquake has accelerated the normalization process, bringing forth upside prospects for the economy in government-controlled areas. Prior to the earthquake, Saudi Arabia’s support for rapprochement and a Jordan-led plan for Syria’s regional reintegration had already created momentum for normalization. Following the earthquake, diplomatic missions from Egypt, Jordan, and Tunisia visited Damascus for the first time since 2011, accompanied by aid, response personnel, and delegations from several Arab states to government-controlled areas. The process was bolstered by Chinese and regional efforts to mend ties between Saudi Arabia and Iran, as well as broader regional efforts towards de-escalation and reconciliation, which culminated in March 2023. Arab states have significantly increased their funding for humanitarian efforts in Syria since February. Aid from Arab states has increased both in nominal terms and as a percentage of total aid. On a cash basis, Arab states provided US$328.6 million in aid to Syria in the first five months of 2023, representing about 30 percent of total aid received during the period (Figure 26). Several factors are driving the normalization of relations between Syria and the Arab states. Syria’s readmission to the LAS, as part of a Jordanian initiative, sheds light on regional priorities and addresses key concerns regarding Syria. The governments of Jordan, which drafted the roadmap for normalization, and the other states backing the initiative hope to encourage the Assad regime to facilitate the return of Syrian refugees from their countries, counter the ongoing presence of ISIS within Syrian territory, and combat the growing trade in narcotics and illegal pharmaceuticals originating in Syria, particularly the widely known amphetamine Captagon.b While the restoration of normal diplomatic and economic ties with Syria’s regional neighbors would have clear benefits for areas under government control, the future of the process remains uncertain. An influx of funding for humanitarian relief and reconstruction would increase consumption and spur economic activity in parts of the country. But the scale of such measures will likely be limited. Additionally, the issue of refugee return and resettlement remains highly contentious, with complex political and social implications. a Resolution 8914 on Syria, LAS, May 7, 2023. b Hamidi, Ibrahim. 2023. “Classified document reveals details of bringing Syria back to Arab League.” Al Majalla, May 6, 2023. https://en.majalla.com/node/290821/documents- memoirs/classified-document-reveals-details-bringing-syria-back-arab-league. (continued on next page) Outlook and Risks 29 THE REGIONAL NORMALIZATION OF RELATIONS WITH SYRIA: IMPLICATIONS OF BOX 3:  THE JORDANIAN INITIATIVE FOR THE CONFLICT AND THE ECONOMY (continued) Following the Earthquake, Arab States Increased Aid to Syria FIGURE 26 •  Syria’s foreign aid received from Arab countries (Share in total, %) 50% 40% 30% 20% 10% 0% 2020 2021 2022 Jan-May 2023 Commitment Paid contribution Source: Syrian Arab Republic Financial Tracking Service of OCHA; World Bank staff estimates. Note: “Arab countries” include Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Mauritania, Oman, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Tunisia, the UAE, and Yemen. 30 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES SPECIAL FOCUS: SYRIA EARTHQUAKE 2023 RAPID DAMAGE AND NEEDS ASSESSMENT According to the World Bank’s Syria Earthquake 2023 RDNA, the disaster caused US$3.7 billion in physical damage across the six most-affected governorates, with additional losses of US$1.5 billion in 2023 alone. The total cost of US$5.2 billion is equal to about 10 percent of Syria’s GDP, underscoring the magnitude of the destruction. Reconstruction and recovery needs are estimated at US$7.9 billion, consisting of immedi- ate disaster-response needs of US$3.7 billion in the first 12 months and additional near-term recovery needs of US$4.2 billion over the next two years. F ollowing the devastating earthquake in information to compensate for gaps in traditional February, the World Bank launched the information sources. The RDNA follows a glob- Syria Earthquake 2023 RDNA to assess ally established and recognized methodology for the disaster’s impact on physical assets and ser- estimating damages, losses, and needs arising from vice delivery and its implications for household the earthquake. Developed by the World Bank Group, wellbeing and the country’s economic outlook. the European Union, and the UN, this methodology has The RDNA covers six governorates with roughly 10 been applied in numerous post-disaster and conflict million inhabitants and includes an in-depth analysis contexts to inform recovery and reconstruction planning. of nine cities (Figure 27).50 It provides preliminary esti- While the RDNA focuses on the damage inflicted by the mates of the cost to rebuild infrastructure and restore earthquake, the pre-earthquake baseline incorporates service delivery, and it sets out general principles for the compounding effect of the preexisting devastation a robust and sustainable recovery in the near term. The Syria RDNA relies on remote data 50 The six governorates covered by the RDNA are Aleppo, sources, which include satellite imagery, social Hama, Idleb, Latakia, Raqqah, and Tartous. The nine media analytics, mobile-phone location data, cities assessed are Aleppo, Harem, Jableh, Afrin, nighttime illumination data, and publicly available Ad-Dana, Jandairis, Azaz, Sarmada, and Latakia. 31 FIGURE 27 • The Earthquake Was Most Severe in Opposition-Controlled Areas Source: Syria Earthquake 2023 RDNA. caused by the conflict. Before preparing the RDNA, The governorate of Aleppo suffered the larg- the World Bank Group conducted six assessments51 est share of the total damage, followed by Idleb. to obtain information on how the ongoing conflict has affected households, physical infrastructure, and the 51 World Bank. 2022. Syria – Joint Damage Assessment quality of service delivery in Syria.52 of Selected Cities. Washington, D.C: World Bank Group. According to the RDNA, the physical dam- http://documents.worldbank.org/curated/en/0991735​ ages and losses caused by the earthquake will 02272397116/P172171027e9070310b52e09ce3ad73​ 93cc. reach US$5.2 billion in 2023, while reconstruc- 52 While all efforts were made to ensure its accuracy and tion and recovery needs will total US$7.9 billion comprehensiveness, the Syria RDNA provides only a over the next three years. The housing sector broad overview of the earthquake’s impact. The use of suffered 24 percent of the direct damage from the remote-based data and publicly available information earthquake, the largest share of any sector, followed limits the scope and depth of the assessment in certain by transportation, the environment (including the cost sectors. Furthermore, while RDNAs are typically carried out with a government counterpart, the Syria RDNA of clearing rubble), and agriculture (Figure 28). Due to was conducted solely by the World Bank without the disruption of production cycles and value chains, any collaboration with the Syrian government. The the agricultural sector incurred losses estimated at assessment methodology was designed to mitigate US$1.3 billion, or 83 percent of total losses. these challenges to the extent possible. 32 THE ECONOMIC AFTERSHOCKS OF LARGE EARTHQUAKES FIGURE 28 • The Housing Sector Experienced the Most Direct Damage, while Agriculture Incurred the Greatest Losses (US$ million) (US$ million) 1,400 1268 1,200 1,000 881 800 718 615 600 559 444 400 203 145 200 98 69 0 0 0 0 31 85 74 0 47 5 32 0 0.2 0 0 Agriculture Housing Transport Environment Cultural heritage Health Water Education Municipal services Public institutions Energy Digital development Damages Losses Source: Syria Earthquake 2023 RDNA Note: The Social Protection and Livelihoods and Social Sustainability and Inclusion sectors do not include damages and losses. The Aleppo governorate, which includes the cities of Earthquake damages and losses were Aleppo, Azaz, and Afrin, incurred 44 percent of the total spread across multiple zones of control. The aggre- earthquake damage (Figure 29A). Idleb governorate, gate impact was largest in government-controlled ar- which includes the cities of Sarmada, Harem, and Ad- eas, where total damage and losses are estimated at Dana, incurred 21 percent of the total damage. Damage US$2.8 billion. The AANES-controlled areas suffered in Aleppo was concentrated in the housing, agriculture, significant losses, amounting to US$1.3 billion, while op- environment, and cultural-heritage sectors. In Idleb, position-controlled regions, including territory held by damage was most significant in agriculture, followed by the SIG, SSG, and other nonstate groups, incurred dam- housing, transportation, the environment, and health. ages and losses totaling US$1.2 billion (Figure 29B). FIGURE 29 • Earthquake Damage and Losses Were Concentrated in the Governorates of Aleppo and Idlib and Spread Across Multiple Zones of Control A. Damages and losses by governorate B. Damages and losses by area of control (US$ million) (US$ million) 2,500 Opposition- controlled 2,000 areas 1,500 Autonomous administration of north and 1,000 east Syria Government- 500 controlled areas 0 Aleppo Idlib Latakia Tartous Raqqa Hama 0 500 1,000 1,500 2,000 2,500 3,000 Source: Syria Earthquake 2023 RDNA. Note: “Opposition-controlled areas” includes territory held by the SIG, SSG, and other nonstate groups. Special Focus: Syria Earthquake 2023 Rapid Damage and Needs Assessment 33 FIGURE 30 • Recovery and Reconstruction Needs are Concentrated in the Governorates of Aleppo and Idlib and in the Agriculture and Housing Sectors A. Share of total needs by governorate B. Recovery and reconstruction needs by sector (%) (US$ million) 2,500 6% 2,000 6% 1,500 5% 1,000 500 12% 45% 0 Housing Health Education Municipal service Cultural heritage Transport Water Power Agriculture Digital development Public institutions Environment Social protection 26% Social sectors Physical infrastructure Cross-cutting and productive sectors sectors Aleppo Idlib Latakia Raqqa Hama Tartous Early recovery (0–12 months) Short term (1–3 years) Source: Syria Earthquake 2023 RDNA Reconstruction and recovery needs for following the earthquake, response efforts should pri- the six assessed governorates are estimated at oritize the most urgent needs of affected communities, US$7.9 billion, including US$3.7 billion over the including emergency shelter, food, water, and health next 12 months and US$4.2 billion over the follow- services. In parallel and over the two following years, ing two years (Figure 30). The sector with the greatest efforts should gradually shift toward rebuilding dam- needs is agriculture (26.8 percent of the total), followed aged infrastructure, restoring a wider range of services, by housing (17.8 percent), social protection (16.3 per- helping affected communities rebuild their livelihoods cent), and transportation (11.8 percent). 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