In a published report on Wednesday, Chatham House indicated that the economy in Syria has contracted by more than 50% in real terms, as the Syrian pound is now 80% less in value and the rate of inflation has averaged nearly 51%.
Outward migration and what is estimated to be more than 250,000 deaths have caused the population of Syria to shrink by over 15% to 17.5 million from 21 million.
With a steep drop in its output of manufacturing and energy sectors, agriculture now represents a greater percentage of the overall output of the country, said the Chatham House.
However, overall the production of food has dropped sharply due to the war. The economic failure might lead to a military collapse within Syria’s army.
More and more strain has been seen the first six months of 2015 on the regime’s military and the economy, which means the worsening situation, could be a catalyst for the military collapse of the regime or for a political settlement that is externally imposed against the wishes of Assad.
The regime in Syria has suffered numerous setbacks over recent months. Those setbacks include losing the city of Idlib to a group of militants led by Jabhat al-Nusra, which is linked, to al-Qaeda.
A recent drive for recruitment failed to raise sufficient men for the military and the government must now rely on fighters from outside Syria to re-fill its ranks.
The report by the Chatham House said while Syria is continuing in some form to operate under a central government located in Damascus, its reach economically has been severely diminished.
Groups like ISIS have now established administrative structures, which has resulted in a war economy where the control of the government has been weakened.
That in turn has led to more reliance on foreign aid, especially from Iran, whose oil and credit supplies enable imports of equipment and commodities into Syria but come with economic and political conditions.