Syrian Arab Republic: Market Profile
Major Economic Indicators
- Syria is a Middle East country at the eastern end of the Mediterranean Sea, bordered by Iraq, Israel, Jordan, Lebanon and Turkey. Damascus is the capital, while Aleppo is the largest city. Syria has a young population, with more than 50% of its citizens aged below 25.
- The Syrian economy has suffered substantial economic degradation since the outbreak of civil war in 2011 in the wake of the Arab Spring. Its infrastructure has been severely damaged with more than 10 million people internally displaced, a development aggravated by the emergence of Islamic State in 2013. An estimated five million Syrian refugees now reside in many external host countries – more than half are in Turkey, followed by Lebanon, Jordan, Iraq and Egypt. Tumbling consumption and tax revenues, along with soaring military costs, have caused a huge fiscal deficit. The World Bank estimated in July 2017 that Syria’s war-inflicted economic loss between 2011 and 2016 totaled US$226 billion.
- In January 2018, The Syrian National Dialogue Congress was held in Sochi, a resort city in Russia, aiming to boost the process of Geneva peace talk and draft a new constitution for Syria. Following the conference, the UN Special Envoy for Syria and the Russian Foreign Minister agreed on the establishment of a commission for preparing and drafting the Syrian constitution.
- The pre-war Syrian economy was buoyed by the oil sector, which accounted for 25% of GDP. Agriculture was another pillar (nearly 20% of GDP) despite the droughts of 2007-10. Tourism was once seen as an emerging driver, which contributed 6.2% of GDP in 2017, compared with 14% prior to the war, according to the World Travel and Tourism Council. Market reforms, including the establishment of the Damascus Stock Exchange, subsidy reforms and consolidation of multiple exchange rates, were implemented and contributed to modest economic growth.
- Oil was Syria’s leading export prior to the war, followed by minerals and agricultural products. Its main exports markets were the EU, Iraq and Saudi Arabia. Imports were dominated by food and livestock, machinery and metals from Ukraine, Russia, Saudi Arabia and Turkey. Since 2011 – when sanctions were imposed by the EU, the Arab League, Turkey, the US and Canada – the country has traded heavily with Iraq. Syria has had free trade agreements (FTA) with Turkey and Iran.
- The China Petrochemical Corporation and China National Petroleum Corporation had previously invested in Syria’s hydrocarbon sector. However, in 2013, most Chinese companies suspended their operations in Syria as the civil war intensified. While the civil war is still going on in Syria, many Chinese enterprises attending the Syria Day Expo in Beijing in July 2017 indicated that they were eager to get involved to reconstruction projects in war-torn Syria. During the Beijing’s First Trade Fair on Syrian Reconstruction Projects in the same month, Qin Yong, the vice president of the China-Arab Exchange Association has also unveiled plans on establishing industrial parks in Syria, with a total investment of US$2 billion. The Syrian Investment Agency (SIA) is the primary agency in promoting foreign investment. Licensed projects are offered with incentives such as tax deduction and customs duties exceptions in a range of industries including manufacturing, agriculture, transport, health and oil and minerals.
- Syria’s FDI stock stagnated at US$10.7 billion since 2011 based on UNCTAD statistics. According to China’s Ministry of Commerce, China’s cumulative FDI in the country declined from US$16.6 million in 2010 to US$10.3 million in 2016.