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Syria - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Damascus
Area:: 185 km2
Total Population:: 22.399
Annual growth rate:: 2.00%
Density:: 122.00/km2
Urban population:: 56%
Population of Damascus (4.350), Aleppo (3.000), Hama (1.500), Hims (823)
Official language: Arabic
Other languages spoken: Kurdish (spoken in the north and north east), Armenian (mainly in Aleppo), Turkish (east of the Euphrates) and Aramaic (biblical language spoken north of Damascus). French is spoken rarely, English prevails in large cities.
Business language: Arabic, French and English.
Ethnic Origins:: Arabs 90%; Armenians, Kurds and others 10%.
Beliefs: Sunni Muslims 74%; Christians (Maronites, Orthodox, others) 10%; Religious communities derived from Islam: Alawites, Druzes, Ismaelians 16%; A small Jewish community (mainly in Damascus, Kamishli and Aleppo).
Telephone codes:
To make a call from: 00 or +
To make a call to: +963
Internet suffix:: .sy
Type of State::
Syria is a republic officially based on a parliamentary democracy.
Type of economy::
Lower-middle-income economy
A country that depends a lot on its petroleum activity. It ranks 29th in the world with production of 26 million tons. Agriculture employs 35% of the active population.

Economic overview

While the country's economic situation had improved since the wave of economic liberalization launched under the presidency of Bashar al-Assad, with GDP more than doubling in five years and the growth rate rising to around 4%, the economy is currently on the brink of collapse. Consumption has dropped, trade is stagnating, inflation is increasing, tourism has collapsed, oil production is falling ... Negative growth could reach 18% in 2013 and the outlook for 2014 remains grim.

After three years of social revolts and later a civil war, Syria is in a disastrous social and economic situation. By late 2013, the war had left around 120,000 people dead and 2.3 million people had fled the country, while 5 million had been left in Syria without a home. The blockade imposed by the Syrian army has led to famine and a rising number of cases of tuberculosis. The country has received support from Russia, which has provided weapons on credit, as well as Iran, which has offered loans and in-kind donations. The country's economic situation is alarming: the budget deficit has reached 14% of the GDP, the state is no longer able to subsidy basic rpoducts, the Syrian pound continues to lose its value and oil production has decreased ten fold due to an embargo. As in the previous year, the 2014 budget is expansionary, reaching 9.8 billion USD. President Asad and his government are likely to focus spending on the zone under the regime's control, on military operations and wages as well as to subsidize fuel and staple foods.

The social situation of the country had been serious already before the crisis: a third of the population lived below the poverty line, unemployment affected 20% of the population (75% of the unemployed were aged 15 to 24 years), and economic growth lagged behind the very high rate of population growth (3.3% / year). Since the war, the situation has only gotten worse. The population, which is living without access to water or electricity, must deal with rising food prices, destruction and privation.

Main industries

Before the civil war which is currently ravaging the country, Syria was in full economic boom, exported mostly raw materials (crude oil, cotton, cereals and phosphates). Agriculture constituted a pillar of its economy, given its large population and its struggle to reach self-sufficiency. The agricultural sector contributed nearly 23% to GDP and employed 15% of the active population; however, it remained a fragile sector, since it directly depends on climatic conditions and especially on water scarcity, key regional factor. Cropland had increased by more than 50% since 1970, largely because of government incentives and more efficient use of irrigation methods. The principal crops include wheat, potatoes, sugar beet, and barley. Syria also raises poultry, cattle, and sheep.

Industry had a relatively important place, especially thanks to the textile, chemical and of course oil industry, the latter representing 14% of the Syrian GDP. The hydrocarbon sector is very important for the Syrian economy and contributes up to 65% to the country’s exports. Nevertheless, the country’s oil reserves are diminishing from year to year and although the increase of barrel price enabled an average growth of 4.5% in recent years, experts expect the Syrian oil wells to dry up by 2020. The manufacturing sector contributes 25% to GDP, with the production of handicrafts such as silk, leather and glass products.

The tertiary sector was well established (mainly tourism) and contributed more than 45% to GDP.

Foreign trade overview

In principle, Syria is very open to international trade. It has signed a free-trade agreement with Turkey and joined the GAFTA (Great Arab Free Trade Area), a regional free-trade zone, as well as an association agreement with the European Union. Foreign trade represents more than 65% of the country's GDP.

After a few years of positive development, trading came to a standstil due to the country's serious political, social and economic crisis, which later changed into a civil war, and the economic sanctions imposed by its trade partners (especially by the embargo adopted by the Arab countries). The volume of trade diminished considerably and the trade deficit increased. Since the beginning of the crisis, oil production has decreased ten fold.

Foreign trade represents about 65% of the country’s GDP. Although trade had been growing in the recent years, it has now dropped because of the serious political, social and economic crisis faced by the country and economic sanctions imposed by its trading partners (including the Arab embargo).

Syria's main exports are its oil resources, but also textile, livestock and vegetables, as well as food products. Its main clients are the Arab countries, with a particular intensification of trade relations with Iraq, Lebanon and Algeria, followed by the European Union, with Germany and Italy in the lead and France only taking the 6th place. In terms of imports, the most important position belongs to oil products (up to 35%), and also to metals and fabricated metal products, followed by chemical industry, livestock and consumer goods. The two main suppliers are the European Union and Asia, respectively.

FDI

Before the crisis facing the country since March 2011, Syria was committed to gradually opening its economy, moving from a closed and centralized economy to a model approximating market economy. In a particularly difficult regional context, the country was trying to set up the mechanism of a market economy in order to regain the trust of foreign investors. The Syrian economico-legal corpus has undergone extensive changes over the past decade. Structural reforms such as the renovation of the Commercial Code (2007), the Maritime Code (2008), the Finance Act (2004) or the Banking Act of 2004 helped to phase out the model of planned economy, which has been in force over decades. The establishment of a private banking system and private insurance companies (domestic or foreign), the opening of the local market with import liberalization (gradual removal of tariff barriers to market access and reorganization of the customs administration with the assistance of the European Union) were all tangible results of the update of the country's legislative and fiscal framework. Syria also established a number of industrial zones as an advantageous framework for foreign companies interested in relocating to the country.

Foreign investors were growing more numerous in the country but the current severe political, economic and social crisis has degenerated into a civil war, which impeded this dynamics and led to the reflux of FDI.
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