Syria’s mild economic recovery faces major constraints

Significance The economy is not showing serious ill effects from the overspill of the conflict in Gaza or recent aid cuts. The government may even have derived some additional financial benefits from Iran, given Syria’s pivotal position in the Iran-led ‘axis of resistance’ against the United States and Israel. Impacts The stabilisation of the currency could encourage the domestic investment of foreign exchange savings held by Syrians abroad. The government will come under pressure to ensure that lower import costs are passed on to consumers. Damascus will present any economic improvement as a vindication of its steadfastness in the face of Western sanctions. International aid cuts will have a lesser impact in government-held areas, except on some insiders who profit from reselling the supplies.