Major earthquake causes devastation in north-western Syria

A powerful earthquake and multiple severe aftershocks on February 6th have left several thousand people dead or injured in north‑western Syria and caused extensive damage to infrastructure. We expect that the effects of the quake will serve as a significant drag on economic growth in the short term, further delaying post‑civil war reconstruction efforts in north‑western Syria and compounding existing currency and inflationary pressures.

Why does it matter?

The epicentre of the earthquake was in eastern Turkey, but it also had a devastating effect on the Syrian governorates of Idlib, Aleppo, Hama and Latakia. We expect that the quake will exacerbate Syria’s existing economic crisis, having inflicted further damage on basic infrastructure already battered by 12 years of conflict. The pace of reconstruction in affected areas will be slow and inconsistent, and government strongholds such as Latakia will probably take priority over more restive regions. Efforts to rebuild and repair infrastructure destroyed or damaged in the civil war have for years been frustrated by deep fiscal imbalances that limit the government’s ability to raise capital expenditure and negligible levels of foreign investment amid tight international sanctions.

Damage from the earthquake will also compound existing currency and inflationary risks. Operations at Syria’s Banias refinery have been paused for an unspecified length of time, and agricultural output is likely to fall, given the extent of infrastructure damage in Syria’s most fertile regions. The supply of food and fuel has been disrupted since late 2022 by a chronic shortage of foreign exchange, which prompted the Central Bank of Syria recently to enact its second devaluation of 2023, bringing the commercial bank rate to S£6,650:US$1, a fall of 54% from the end‑2022 level. The humanitarian risks of food and fuel shortages are likely to be exacerbated by the division of political authority between the provinces affected by the quake. Idlib is controlled by Haya Tahrir al‑Sham, an opposition group, and refugees from elsewhere in Syria account for up to one‑half of the governorate’s population of some 3m. Refugees in the governorate and those in the area north of Aleppo controlled by Turkish‑backed forces are heavily dependent on aid delivered from Turkey or the Syrian government, both of which are expected to prioritise resources for their own recovery efforts.

What next?

The disruption caused by the earthquake will probably prompt a downward revision of our economic growth forecast for 2023, which currently stands at 1.2%. We expect that the international community will provide humanitarian aid, but this is likely to face disruption across Syria’s political divides and is not expected to match the spending necessary to meet reconstruction costs or to offset the effects of rising inflationary pressures.