No kidding: GDP grows slower in war than during peacetime #SyriaCrisis #YemenCrisis #iraq

A study by Collier (1999) found that, during civil war, countries tended to grow around 2.2 percentage points more slowly than during peace. ~ World Bank

No kidding: War costs money and GDP grows slower in war than during peacetime.  The World Bank’s Middle East & North Africa division released the “MENA Quarterly Economic Brief, January 2016: The Economic Effects of War and Peace” and concluded that the Middle East & North Africa region will not grow as much as anticipated due to the costs of conflict in Syria, Libya, Yemen, and Iraq.  The report also considers how the decision to lift economic sanctions off of Iran–although positive economic impact–is not enough to offset the costs of conflict in the region.  In fact, GDP growth, in 2015, grew only 2.6 %.

Terrorism Obviously Affects Tourism & Adversely Affect MENA Growth

The report itemized the costs of terrorism to MENA countries who heavily rely on tourism for its economic health–like Egypt, Lebanon, and Tunisia.  Since the last quarter of 2014, the number of visiting tourists has dropped by at least 15%, according the United Nations World Tourism Organization.  This is no surprise as we discussed on PITAPOLICY in 2015 regarding the Sinai attacks in Egypt, the Bardo museum and beach bombings in Tunisia, and Lebanon’s bombing in December.

The World Bank report concludes:

Our findings show that if MENA countries, which are the least democratic in the world, are able to transition to full-fledged democracies, average per-capita GDP growth rates, currently expected to be about 3.3 percent, will reach 7.8 percent in five years.


Syria Conflict Costs over $115 Billion + Human Lives

As Syrian still residing in Syria operate under the February 26th ceasefire, we wonder how much of the humanitarian aid has miraculously appeared in besieged towns–and at what cost.  The human cost is over 260,000 people dead.  The human cost also includes the forced migration of 4.6 million Syrians to leave the country, according to UN figures.  The World Bank report says that the Syria conflict costs about $35 B (measured in 2007 prices) to Iraq, Lebanon, Jordan, Turkey, and Egypt.  This is equivalent to eating up Syria’s peacetime GDP for one whole year.   At the same time, Syria’s economic health is measured by its “capital stock”– or if Syria was a company, its infrastructure and assets.

A preliminary World Bank-led assessment of damage in six cities in Syria (Aleppo, Dar’a, Hama, Homs, Idlib, and Latakia), showed an estimate of $3.6-4.5 billion as of end 2014. As of end of 2014, damage to the housing sector in Syria accounted for more than 65 percent; restoring the energy sector in the six cities will require between $ 648 and $791 million; damages to the health sector infrastructure was estimated to be between $203 and $248 million; damages to education sector infrastructure was estimated to be between $101 and $123 million.~World Bank Report

So when economists say that Syria’s capital stock faces damages of $80 Billion, they’re saying that .  Essentially, the Assad regime and all proxy actors have facilitated a damages bill of  $115 Billion that will be passed on to who is ever left standing and able to pay.

No wonder the international donor community pledged $10 B pledged earlier this month–yet that’s only one-third of the war cost resulting from the Assad regime’s military expenditures, opposition forces spending, foreign intervention, foreign arms sales to other combatant groups, refugee flight and associated food/shelter needs, as well as the damage to Syrian infrastructure.


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Filed under Analysis, PIDE (Policy, International Development & Economics), Politics

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