Almost daily, global media report intense violence, large-scale human suffering, and destruction in Iraq, Libya, Somalia, Syria, and Yemen. These conflicts in the Middle East and North Africa (MENA) have fundamentally changed the region’s physical, economic, and social landscape, which, at the onset of the Arab Spring just over five years ago, looked much more hopeful. Yet, as conflicts intensify and spread, the region now faces unprecedented challenges. Violent, non-state groups such as the Islamic State of Iraq and the Levant have emerged as significant political and military actors, holding large areas of territory. And a refugee crisis bigger than any since World War II is affecting the MENA region, Europe, and beyond, straining economies and social systems.
On September 16, just days before the 71st Session of UN General Assembly, the International Monetary Fund released its report entitled “The Economic Impact of Conflicts and the Refugee Crisis in the Middle East and North Africa” which analyzes 179 conflict countries since 1970 to quantify economic costs. Here are some key findings of the report.
1. Armed conflicts in the MENA are not only devastating the economies gripped by fighting, but are also sapping growth in neighbouring countries and those hosting millions of refugees.
2. The Middle East economies have plunged into decline in the years of war since the Arab Spring, creating daunting economic and development challenges.
3. The drops in economic output in war-torn Syria, Libya and Yemen in recent years have far exceeded the worldwide average.
4. After three years of conflict, MENA countries wracked by fighting suffered average GDP losses of 6-15 percentage points, compared to a 4-9 percentage-point average worldwide.
5. After five years of war, Syria’s GDP is less than half its pre-conflict level in 2010 while Yemen lost 25 percent to 35 percent of its GDP in 2015 alone. Oil-dependent Libya saw its GDP fall 24 percent in 2014.
6. Countries bordering a high-intensity conflict zone suffered an average annual GDP decline of 1.4 percentage points worldwide, with a bigger drop of 1.9 percentage points in the MENA region.
7. The migration of more than half of Syria’s population — 6.6 million internally and more than 5 million to other countries — has magnified the economic losses, dramatically escalating poverty, unemployment and school dropouts in countries that were already struggling.
8. Many of the refugees are skilled workers, leaving the countries in conflict with a significant brain drain. In contrast to Europe, where the influx of refugees from Syria and Yemen has only had a small economic impact and some positive effects, the migration has had a much more detrimental effect in MENA host countries.
9. In Lebanon, migrants competing for informal employment have pushed down wages across the economy, pressuring already-stretched public services, including health care and education.
10. Physical infrastructure damage, now estimated at $137.8 billion in Syria and more than $20 billion in Yemen, represents a long-term challenge for policymakers and has reduced trade and output in neighbouring countries.
11. Much of the productive capital in conflict zones has been destroyed, personal wealth and income losses are enormous, and human capital deteriorates with the lack of jobs and education.
12. Nose-diving growth, soaring fiscal imbalances and decimated labour markets across the region call for newly concerted efforts from donor countries and coordination among humanitarian aid groups and development bodies.