This is how collapse of Assad regime in Syria may affect Türkiye’s economy

As the conflict in Syria nears its potential resolution, Türkiye faces significant economic, social, and demographic changes tied to the likely return of Syrian refugees.

Hosting nearly 3.6 million refugees for over a decade, Türkiye’s response spanned humanitarian aid, economic integration, and policy challenges. Following the fall of the al-Assad regime which lasted 51 years, Syrians living near the borders already rushed checkpoints to cross back into their homeland on Monday, Ihlas News Agency reports.

Analysts Mahfi Egilmez and Hasan Bardakci suggest that their departure could reshape Türkiye’s economic and social landscape, providing both opportunities and challenges.

Impact on labor markets

Referring to Syrian refugees predominantly working in agriculture, construction, textile, and service industries, often in informal roles with lower wages, Hasan Bardakci postulated possible effects on labor market functions regarding their return to Syria:

• Labor shortages: Sectors reliant on inexpensive labor may experience workforce gaps, leading to production slowdowns.
• Increasing wage costs: Reduced labor supply might push wages higher, posing financial burdens for employers but benefiting local workers.

Shifts in consumer demand

Syrian refugees contributed significantly to Türkiye’s domestic consumption, particularly in housing, food, and basic goods. According to Bardakci, their departure might lead to:

• Declining demand: Lower spending could thwart small businesses catering to low-income groups.
• Housing market adjustments: Rental demand could fall, potentially stabilizing Türkiye’s housing market and reducing rental prices.

On the other hand, Türkiye’s budget has faced substantial strain from refugee-related costs in education, healthcare, and social assistance. Repatriation might ease fiscal pressures, though reduced consumption could also decrease indirect tax revenues, requiring strategic budget adjustments.

New trade and reconstruction opportunities in Syria

Mahfi Egilmez remarked the reconstruction of a war-torn Syria presents significant prospects for Turkish industries, as rebuilding efforts in Syria, with financial backing from international institutions like the IMF and the World Bank, could drive demand for Turkish construction, infrastructure, and service exports.

Meanwhile, Borsa Istanbul opened with a significant surge in construction-related stock prices, particularly among prominent construction companies by 5.19%. Stock prices of Usak Seramik and Sanko Holding, which own cement factories, rose by 10%. Other notable increases included:

• Nuh Cimento, OYAK Cimento, CIMSA, Limak Dogu Anadolu Cimento, and Cimbeton shares, all hitting the upper limit.
• Afyon Cimento shares rising by 8%.
• Iskenderun Demir ve Celik (Isdemir) gained 10%.

Socioeconomic challenges and strategies

Despite the economic benefits, the large-scale departure of refugees may disrupt Türkiye’s demographic and social fabric, particularly in regions where they are heavily concentrated, such as Gaziantep and Sanliurfa, emphasizing the need for well-planned policies, including gradual withdrawal of public assistance to incentivize voluntary returns and minimize social discontent, Bardakci said.

Additionally, returning refugees could strengthen Türkiye-Syria trade ties and enhance Türkiye’s access to broader Middle Eastern markets, Bardakci evaluated.

Effective policy frameworks, robust international cooperation, and adaptive economic strategies would be crucial in navigating this multifaceted transformation, analysts forecasted.