Economy of Syria - Basic Information

Basic Information

During the 1960s, citing its socialist ideology, the government nationalized most major enterprises and adopted economic policies designed to address regional and class disparities. This legacy of state intervention and price, trade, and foreign exchange controls has hampered economic growth. Syria also has low investment levels, and relatively low industrial and agricultural productivity. Economic reform has been incremental and gradual. In 2001, Syria legalized private banking. In 2004, four private banks began operations. In August 2004, a committee was formed to supervise the establishment of a stock market. Beyond the financial sector, the Syrian Government has enacted major changes to rental and tax laws, and is reportedly considering similar changes to the commercial code and to other laws, which impact property rights.

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 Deir ez-Zor in eastern Syria. This discovery relieved Syria of the need to import light oil to mix with domestic heavy crude in refineries. Recently, Syrian oil production has been about 379,000 barrels per day (bpd). Syria’s oil reserves are being gradually depleted and reached 2.5 billion barrels in January 2009. Experts generally agree that Syria will become a net importer of petroleum by the end of the next decade. Recent developments have helped revitalize the energy sector, including new discoveries and the successful development of its hydrocarbon reserves. According to the 2009 Syria Report of the Oxford Business Group, the oil sector accounted for 23% of government revenues, 20% of exports, and 22% of GDP in 2008. Syria exported roughly 150,000 bpd in 2008, and oil accounted for a majority of the country's export income.

Ad hoc economic liberalization continues to add wealth inequality, impoverishing the average population while enriching a few people in Syria's private sector. In 1990, the government established an official parallel exchange rate to provide incentives for remittances and exports through official channels. This action improved the supply of basic commodities and contained inflation by removing risk premiums on smuggled commodities.

Foreign aid to Syria in 1997 totaled an estimated US$199 million. The World Bank reported that in July 2004 that it had committed a total of US$661 million for 20 operations in Syria. One investment project remained active at that time.