The Economic Impacts of the Syrian Refugee Crisis

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Death, destruction, lost families…how would it feel to see your life become a road to survival? The Syrian refugee crisis began with the 2011 Syrian civil war that caused thousands of refugees to escape from Syria and go into poverty by living in refugee camps in countries like Jordan, Turkey, and Lebanon. The crisis beckoned significant economic contraction, which massively hindered trade and growth in these nations, also endangering regional stability. The prolonged conflict and corruption caused the Syrian economy to contract by 60% while consumer goods observed a 300% inflation rate. Furthermore, the crisis caused great instability in the region and disrupted bilateral and transit trade routes, as well as resulting in the worst displacement crisis since World War II.

The COVID-19 pandemic has had devastating consequences on the socioeconomic landscape of host communities, including Jordan, Lebanon, and the Kurdistan region of Iraq. Approximately 4.4 million individuals in these areas have been thrust into poverty, exacerbating the challenges faced by 1 million Syrian refugees and 180,000 internally displaced Iraqis. Notably, the pandemic-induced economic fallout has led to a staggering 38 percentage point increase in poverty rates among Jordanians and an 18 percentage point increase for Syrian refugees residing in Jordan. This grim reality underscores the profound impact of the pandemic on vulnerable populations, compounding pre-existing hardships.

The cumulative economic toll of the Syrian conflict from 2011 to 2016 is staggering, amounting to an estimated US$226 billion— this is equivalent to approximately four times Syria's GDP in 2010. This substantial loss has had a profound impact on the country's economic landscape, leading to a drastic reduction in Syria's Gross National Product per capita. Consequently, Syria has undergone a distressing reclassification, shifting from its prior economic standing to being categorised as a low-income nation since 2018. As a result of the conflict, the healthcare system has severely deteriorated, and COVID-19 has made the population's pre-existing vulnerability worse.

If we look at the economy itself, the labour market has been impacted in various ways by the influx of Syrian refugees. The nation's finances were the first to bear the weight of the situation. Despite having little economic growth, few resources, and no public finances, Jordan has been helping Syrian refugees since 2011. Beyond the direct and indirect costs of housing Syrian refugees (which came to about $7.9 billion), the Jordanian government also incurred additional costs to provide services like food, electricity, water, health care, and security for refugees.

The effects of the large-scale Syrian refugee crisis on Jordan's infrastructure, water, energy, education, security, and housing are among the most crucial factors. The impacts on the education sector are evident in the rise in student enrolment, the rise in student-teacher ratios, and the shortening of the school day as a result of the double shifts policy implemented in the governorates with sizable populations of Syrian refugees. In terms of the housing market, the influx of Syrian refugees has led to a rise in rent, particularly in the provinces where they have settled. This has had an adverse effect on locals who are in competition with the refugees for available housing.

Jordan is already known as one of the water-poor countries in the world, with a population that struggles to get clean, sufficient fresh water. However, the country is further experiencing a freshwater shortage due to the large influx of Syrian refugees, which is placing additional strain on the nation's already scarce water supplies. Moreover, the impact of Syrian refugees extends beyond water shortages, encompassing detrimental effects on infrastructure, security, energy, and health.

However, this is not to say that the influx of Syrian refugees has been purely detrimental to the host nations’ economies. For instance, more than 90% of Syrian refugees reside outside of camps and are now major consumers of regional goods and services, which has been extremely beneficial to local businesses. Furthermore, the refugees have brought with them private capital and specialised knowledge, spurring economic expansion in nations like Egypt, Jordan, and Turkey. Despite the economic challenges posed by the crisis, the substantial economic benefits generated by initiatives such as the 3RP can play a crucial role in fostering social cohesion among host communities. The facts speak for themselves— as of 2018, 3RP was projected to generate a large amount of fiscal stimulus and expected to have a short-term GDP impact of roughly $17–25 billion, along with creating an estimated 75,000–110,000 jobs.

Additionally, the economic activity in and around the refugee camps has boosted trade and commerce, created jobs and opportunities for entrepreneurship, and contributed to the local economies. Small businesses have been established by Syrian refugees thanks to their entrepreneurial spirit, providing revenue for both the host communities and other refugees. Furthermore, the crisis has drawn more attention from governments, international organisations, and relief agencies, which has stimulated the local economies near the refugee camps.

Although this economic stimulus has received little attention in the general public conversation, it offers policymakers an engaging story to promote social cohesion within host communities. Since increased social stability is often correlated with economic stability, the GDP growth and job creation from this economic stimulus presents opportunities for the development of more harmonious relationships between communities. Policy considerations intended to foster greater social cohesion and resilience within the communities should acknowledge and utilise these potential economic benefits. By investigating these financial advantages, there is a chance to spur a discussion about the wider effects of the refugee crisis and the region’s consequent economic growth.  

Keeping all these things in mind, although the Syrian refugee crisis has created many difficulties, it has also had a positive economic impact, promoting social cohesion and boosting the economies of the areas that are home to the camps. Acknowledging and leveraging these economic benefits to address broader policy concerns will boost economic resilience and help manage the disturbing impacts of the Syrian refugee crisis. In addressing these tragedies with utmost seriousness, it is vital to recognise the importance of economic resilience as a pathway to achieving economic stability and collective well-being. After all, even amidst adversity, strategic utilisation of economic opportunities can pave the way for a more sustainable and secure future.