Asian Countries

Syria Economy Overview

Syria has a structurally fragile economy. Agricultural possibilities are limited by the unfavorable climatic conditions; moreover, with the exception of oil fields that are certainly not of particular importance, the country has very modest mineral resources. There have been various government initiatives aimed at modernizing traditional agricultural activities and starting the industrialization of the country, but these initiatives have found very difficult obstacles in their path. The political difficulties of an internal order, expressed by strong tensions within the party in power itself, the BaŹ½th, were in fact added to the enormous ones of an international order. In fact, Syria is perhaps the Arab state that most drastically suffered the repercussions of the long and troubled conflict with Israel; moreover, the direct Syrian intervention in Lebanon since 1976 – a consequence of Syria’s involvement in the complex Middle East crisis – has caused a further worsening for the economy and stability of the country; defense spending has always been an important part of GDP, to the detriment of other sectors. In the second half of the 1980s and even more so at the beginning of the following decade, the country finally experienced a moderate economic recovery, favored by the increase in oil extraction, the promulgation of a new law on investments, further liberalization measures and the granting of aid and credits by Western countries.

In the 1990s, according to businesscarriers, the collapse of the communist regimes of Europe East and the consequent interruption of the privileged relations that Syria had with them, made it necessary to reform the Syrian economy, hitherto contained within the schemes of centralized planning. The decision to change the model of economic development and to grant, albeit to a limited extent, the opening to the market economy did not derive exclusively from external extra-economic factors, but was adopted to counterbalance the recession that has emerged towards the end. in the 1980s, when there was a drastic reduction in GDP per capita. Reduced exports to Eastern European countries from 40% to 5%, Syria has gradually increased the share of exports to the EU, in the perspective of an association agreement whose concrete implementation has been hindered by the heavy debt it has contracted with some EU countries (Germany and France in particular). This indebtedness has compromised the disbursement of other investments by the European side, just at a time when the Arab countries have significantly reduced the flow of their loans. The difficulty in finding funds to support economic growth, aggravated by the prospect of the depletion of oil reserves by the second decade of the 2000s, prompted the government to launch a series of reforms in the oil sector to encourage foreign companies the research of new fields.

In the 1990s, the authorities tried to foster dialogue with other Middle Eastern countries, with the European Union and with international organizations to encourage trade and above all to deal with the issue of foreign debt incurred in previous decades. Furthermore, since the year 2000 the country has started with greater vigor towards the transformation and modernization of the centralized economic structure, which appears to be absolutely inefficient. However, state control is still extensive and there is strong resistance to attempts to open up to the private sector and foreign investment. Agriculture and the tertiary sector are priority sectors in government development programs. As for the first, the projects are aimed at improving the efficiency and productivity to encourage exports but above all to guarantee food self-sufficiency for the country, bearing in mind that the prices of some products are controlled, thus constituting a significant item in the state budget. Since the beginning of 2000, the country has eliminated some restrictions and has partially opened up to the international market and foreign investments, with the creation of a dedicated agency, the Syrian Investment Authority; between 2006 and 2007 the policy relating to international trade was re-discussed, which clearly establishes which products can be exported and above all imported; the “black list” of prohibited goods has been drastically reduced. Tourism is growing and the construction of residential, commercial and hotel infrastructures has dragged the construction sector. However, the GDP is still quite low, which in 2008 was US $ 54,803 million (US $ 2,757 per capita GDP).

Syria Economy Overview