Syria - Economy

Economy

Syria is a middle-income country, with an economy based on agriculture, oil, industry, and tourism. As of 2012, Syria's oil and tourism industries in particular have been devastated, with $5 billion USD lost to the ongoing conflict of the civil war. 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; widespread corruption; weak financial and capital markets; and high rates of unemployment tied to a high population growth rate. Reconstruction needed due to the ongoing civil war will cost as much as $10 billion USD.

As a result of its political isolation which includes significant economic sanctions from the Arab League, EU and the US, Syria has low rates of investment, and low levels of industrial and agricultural productivity. Syria's GDP declined by over 3% in 2011, and is expected to further decline by over 8% in 2012. The two main pillars of the Syrian economy have been agriculture and oil. Agriculture, for instance, accounts for 17.7% of GDP and employs 17% of the total labor force. Prior to the civil war in 2011, the government hoped 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 began to institute economic reforms aimed at liberalizing most markets, but those reforms were slow and ad hoc, and have been completely reversed since the outbreak of conflict in 2011. For ideological reasons, privatization 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 Deir ez-Zor in eastern Syria. Syria's rate of oil production has decreased dramatically from a peak close to 600,000 barrels per day (95,000 m3/d) (bpd) in 1995 down to less than 140,000 bbl/d (22,000 m3/d) in 2012. Syria exported roughly 200,000 bbl/d (32,000 m3/d) in 2005, and oil still accounts for a majority of the country's export income. Syria also produces 22 million cubic meters of gas per day, with estimated reserves around 8.5 trillion cubic feet (240 km3). 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 subsidized, 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 22.2 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. Government and public sector employees constitute over one quarter of the total labor force. 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.