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Syria Economy
 
 
 

General

Syria is a middle-income, developing country with an economy based on agriculture, oil, industry and tourism. However, Syria's economy faces serious problems and challenges and impediments to growth, including: a large and poorly performing public sector; declining rates of oil production; widening non-oil deficit; wide scale corruption; weak financial and capital markets; and high rates of unemployment tied to a high population growth rate.

As a result of an inefficient and corrupt centrally planned economy, Syria has low rates of investment, and low levels of industrial and agricultural productivity. Its GDP growth rate was approximately 2.9% in 2005, according to IMF statistics. The two main pillars of the Syrian economy have been agriculture and oil. Agriculture, for instance, accounts for 25% of GDP and employs 42% of the total labour force. The government hopes to attract new investment in the tourism, natural gas, and service sectors to diversify its economy and reduce its dependence on oil and agriculture. The government has begun to institute economic reforms aimed at liberalising most markets, but reform thus far has been slow. For ideological reasons, privatisation of government enterprises is explicitly rejected. Therefore major sectors of the economy including refining, ports operation, air transportation, power generation and water distribution, remain firmly controlled by the government.

Syria has produced heavy-grade oil from fields located in the northeast since the late 1960s. In the early 1980s, light-grade, low-sulphur oil was discovered near Dayr al-Zur in eastern Syria. Syria's rate of oil production has been decreasing steadily, from a peak close to 600,000 bbl/d (barrels per day) in 1995 down to approximately 425,000 bbl/d in 2005. Experts generally agree that Syria will become a net importer of petroleum not later than 2012. Syria exported roughly 200,000 bbl/d in 2005, and oil still accounts for a majority of the country's export income. Syria also produces 22 million cubic metres of gas per day, with estimated reserves around 8.5 trillion cubic feet. While the government has begun to work with international energy companies in the hopes of eventually becoming a gas exporter, all gas currently produced is consumed domestically.

Some basic commodities, such as diesel, continue to be heavily subsidised, and social services are provided for nominal charges. The subsidies are becoming harder to sustain as the gap between consumption and production continues to increase. Syria has a population of approximately 19 million people, and Syrian Government figures place the population growth rate at 2.45%, with 75% of the population under the age of 35 and more than 40% under the age of 15. Approximately 200,000 people enter the labor market every year. According to Syrian Government statistics, the unemployment rate is 7.5%, however, more accurate independent sources place it closer to 20%. Government and public sector employees constitute over one quarter of the total labour force and are paid very low salaries and wages. Government officials acknowledge that the economy is not growing at a pace sufficient to create enough new jobs annually to match population growth. The UNDP announced in 2005 that 30% of the Syrian population lives in poverty and 11.4% live below the subsistence level.

Syria is developing regional free trade agreements. As of January 1, 2005, the Greater Arab Free Trade Agreement (GAFTA) came into effect and customs duties were eliminated between Syria and all other members of GAFTA. In addition, Syria has signed a free trade agreement with Turkey, which came into force in January 2007, and initialed an Association Agreement with the European Union, which has yet to be signed. Although Syria claims a recent boom in non-oil exports, its trade numbers are notoriously inaccurate and out-of-date. Syria's main exports include crude oil, refined products, raw cotton, clothing, fruits and grains. The bulk of Syrian imports are raw materials essential for industry, vehicles, agricultural equipment and heavy machinery. Earnings from oil exports as well as remittances from Syrian workers are the government's most important sources of foreign exchange.


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