The Assistant Governor of the Central Bank of Syria, Maha Abdel Rahman, recently disclosed that Syria’s inflation rate soared to 122% annually as of last April.
In an interview with the pro-regime channel Sama on Sunday, Abdel Rahman attributed the steep inflation to a combination of international factors, including Western sanctions on the Syrian regime and rampant smuggling across unmonitored borders with neighbouring countries.
Abdel Rahman also underscored domestic factors contributing to the crisis, citing diminished production capacity, a trade deficit, and the regime’s longstanding reliance on deficit financing.
Despite the alarming rate, Abdel Rahman maintained that Syria has not yet entered a state of “runaway” inflation.
Interestingly, the Central Bank ceased the regular issuance of official reports on inflation rates in August 2020 when it hit 139%, deviating from standard practices observed by most countries.
A report dated August 10, 2023, revealed that Syria ranked third globally in inflation levels, reaching 238% annually, trailing behind Zimbabwe and Venezuela, as per the “Hanke Panel for Measuring Economic Inflation,” which operates independently from government data sources.
Extreme recession
In light of the current situation in Syria, characterized by soaring commodity prices, economic researcher Zaki Mahshi highlighted to Enab Baladi that the prevailing inflationary condition represents an extreme form of stagflation, one of the most dire economic circumstances any nation can face.
Stagflation denotes an economy in disarray, where prices surge, economic growth falters, and the rate of goods and services production declines.
A primary driver of stagflation or inflation in Syria, from an economic standpoint, is the dearth of commodity supply and the scarcity of essential goods. This scarcity propels price hikes in local currency. Compounded by the collapse of domestic production and heavy reliance on imports requiring foreign exchange, the inevitable consequence is a spike in nominal prices of goods.
This article was translated and edited by The Syrian Observer. The Syrian Observer has not verified the content of this story. Responsibility for the information and views set out in this article lies entirely with the author.
