Syria

GDP (US$ Billion)

60.04 (2010)

World Ranking 68/191

GDP Per Capita (US$)

2,807 (2010)

World Ranking 130/191

Economic Structure

(in terms of GDP composition, 2017)

Services
(60.40%)
Industry
(19.60%)
Agriculture
(20.00%)

External Trade (% of GDP)

76.5 (2007)

Currency (Period Average)

Syrian Pound

11.23 per US$ (2016)

Political System

Unitary multiparty republic

Overview

Now entering its ninth year, the violent conflict in Syria continues to take a heavy toll on the Syrian economy and growth has slumped to levels last seen in the early 1990s. The UN estimates that more than 250,000 people have died. More than 6.3 million people are internally displaced and 5.6 million are registered as refugees. In July 2017, the World Bank produced a report on the economic impact of the conflict in Syria. The cumulative GDP loss from 2011 to 2016 was estimated at USD226.0 billion, with the war having disrupted economic activity by diminishing economic connectivity, reducing incentives to pursue productive work, and disconnecting networks and supply chains. The cumulative GDP loss due to disruptions in economic organisation exceeds that of physical destruction by a factor of 20. The longer the conflict lasts, the more difficult recovery will be because the effects of economic deterioration become more persistent over time. Simulations also show that outmigration could double between the sixth and 20th year of the conflict. The assessment and analysis underscore the World Bank's ongoing dialogue with the United Nations, the European Union and other development partners, and they provide an important understanding of Syria's economy, infrastructure, service delivery and institutions, but they do not provide a picture of the reconstruction that will be needed once the conflict in Syria stops.

 

Sources: UNHCR, World Bank, Fitch Solutions

 

Major Economic/Political Events and Upcoming Elections

July 2017
Hezbollah and the Syrian army launched a military operation to dislodge jihadist groups from the Arsal area, near the Lebanese-Syrian border.

 

October 2017
The Islamic State (IS) group was driven out from Raqqa.

 

November 2017
The Syrian army took full control of Deir al-Zour from IS. Syrian and Iraqi forces put IS under pressure in the dwindling areas still under its control.

 

December 2017
Russian President Putin visited and declared the mission accomplished for his forces in the battle against IS.

 

January 2018
Turkey launched an assault on northern Syria to oust Kurdish rebels controlling the area around Afrin. It seized the town in March.

 

February 2018
The Syrian government launched attacks on Eastern Ghouta, the final rebel-held enclave near Damascus.

 

October 2018
Jordan reopened the Naseeb-Jaber border crossing with Syria, which had previously served as an important commercial link for businesses involved in regional trade. Jordan had shut it down after it was seized by Syrian rebels in 2015, causing commercial activity to plummet in the adjoining free trade zone.

 

November 2018
The Syrian Arab News Agency (SANA) claimed that the General Establishment for Free Zones had achieved revenue of SYP3.3 billion for the year ending October 2018.

 

November 2018
Syrian government claimed of a suspected gas attack in Aleppo were followed by warplanes attacking rebel-held areas of the north for the first time since the creation of a buffer zone by Russia and Turkey in Idlib Province.

 

December 2018 - January 2019
United States President, Donald Trump announced plans to withdraw United States troops from Syria.

 

February 2019
The Syrian Arab News Agency reported that exports through the Naseeb-Jaber border crossing reached more than SYP13 billion from mid-October 2018 to mid-January 2019.

 

February 2019
The caliphate in Syria nears its end in the only remaining live front in the war as Baghouz, near the Iraq border, was besieged. Idlib will be the last pocket of Syria held by Islamists.

 

March 2019
The Syrian Arab News Agency reported a rise in the number of registered workers, possibly heralding a recovery in the labour market.

 

March 2019
The Arab League summit will be held in Tunis. Syria remains suspended, but discussions will be held on when to lift that suspension.

 

Sources: BBC country profile – Timeline, United Nations, Middle East Institute, SANA, BBC, The Syrian Observer, Fitch Solutions

Major Economic Indicators
Graph: Real GDP and Inflation
Note: 2010 is the latest available data
Graph: Real GDP and Inflation
Note: 2010 is the latest available data
Graph: Syria GDP by sector (2017)
Source: CIA World Factbook 2017 estimates
Graph: Syria GDP by sector (2017)
Source: CIA World Factbook 2017 estimates
Graph: Unemployment Rate
 
Graph: Unemployment Rate
 
Graph: Syria current account balance
Note: 2010 is the latest available data
Graph: Syria current account balance
Note: 2010 is the latest available data

e = estimate

Sources: IMF, World Bank

Date last reviewed: March 22, 2019

External Trade

Merchandise Trade

Graph: Syria merchandise trade
 
Graph: Syria merchandise trade
 
 

e = estimate

Source: WTO

Date last reviewed: March 22, 2019

 

Graph: Syria major export commodities (2010)
 
Graph: Syria major export commodities (2010)
 
Graph: Syria major export markets (2010)
 
Graph: Syria major export markets (2010)
 
Graph: Syria major import commodities (2010)
 
Graph: Syria major import commodities (2010)
 
Graph: Syria major import markets (2010)
 
Graph: Syria major import markets (2010)
 

Note: 2010 is latest available direct data

Sources: Trade Map, Fitch Solutions

Date last reviewed: March 22, 2019

 

Trade in Services

Graph: Syria trade in services
 
Graph: Syria trade in services
 
 

Note: 2011 is latest available data

Source: WTO

Date last reviewed: March 22, 2019

Trade Policies
  • The Syrian Arab Republic's Working Party for World Trade Organization (WTO) accession was established in May 2010. The Working Party has not yet met. Syria was open to international trade before the civil war began in 2011, and the government is still aiming to harmonise its import tariffs and custom duties to adapt them to WTO standards.

  • Syria experienced a few years of positive trade development, after which trading came to a standstill due to the start of the civil war and the consequent economic sanctions imposed by the country's trade partners.

  • Syria's average tariff rate is 14.2%, the second highest in the Middle East and North African region (out of 18 countries). Syria imposes a progressive tax rates system for partners that it does not have a trade agreement with. Customs duties range between 1% and 200%, where raw materials are taxed at 5-10%, equipment for industry 10-20%, foodstuffs 1-15%, and machines 30-60%. A surtax of between 6% and 35% is levied on products meant to be sold to military barracks, schools and local councils. Tourism vehicles weighing under one ton are taxed 150%.

  • In May 2009, Syria banned all imports of 'any meat or products or materials containing derivatives of pigs'. Furthermore, travellers flying to Syria are banned from bringing in pets (unless accompanied with health certificates), animal products or prepared foodstuffs that contain animal products regardless of their origin. The measures apply to all of Syria's trading partners. Although this measure is likely to have been taken on the grounds of protecting the citizenry's health, it still discriminates against foreign producers of the affected products.

  • Customs duties are currently being lowered and reviewed in the context of an agreement of association between Syria and the EU and Syria's eventual membership to the WTO. Customs formalities have therefore been simplified and the list of prohibited imports has been lowered.

  • Syria has 34 signed bilateral investment treaties that are in force and six more signed but not yet in force.

Sources: WTO – Trade Policy Review, Fitch Solutions, UNCTAD

Trade Agreement

Multinational Trade Agreements

Active

  • Syria is a member of the Pan-Arab Free Trade Area (PAFTA): PAFTA's signatories consist of Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, the United Arab Emirates and Yemen. PAFTA was established in order to create an Arab economic bloc that could effectively compete with other countries while ensuring that each country increased trade with one another. PAFTA entered into force on January 1, 1998. The most important aspect of the agreement was that over the next 10 years (to 2008), each member country would seek to reduce customs fees by 10% per annum as well as gradually eliminate trade barriers. In March 2001, the member countries decided to reduce the period over which the reductions in tariffs could be made so as to speed up the process, and in January 2005 the elimination of most tariffs among the PAFTA members was enforced. The agreement covers trade in goods.

  • Syria-EU Co-operation Agreement: This bilateral agreement between the EU and Syria entered into force on July 1, 1977, and it covers trade in goods. However, because it dealt with trade in crude oil and petroleum products, gold, precious metals and diamonds the agreement is suspended. An association agreement between Syria and the EU has been negotiated, but put on hold because of the internal situation in Syria, where internal repression has led to restrictive measures by the EU that have had a significant impact on bilateral trade. Compared to 2011, imports from Syria have dropped by 97% and exports by 85%, and where once they consisted of fuel and mining products they now consist mainly of agricultural products.

  • Turkey-Syria Free Trade Agreement (FTA): This bilateral FTA between Turkey and Syria entered into force on January 1, 2007, and it covers trade in goods.

Sources: WTO Regional Trade Agreements database, European Commission, Fitch Solutions

Investment Policy

Foreign Direct Investment

Graph: Syria FDI stock
Note: Latest reliable data in 2011 for inward and outward FDI stock; inward and outward FDI stock remained at 2011 levels through to 2017 (according to UNCTAD)
Graph: Syria FDI stock
 
Graph: Syria FDI flow
Note: Latest available data in 2011 for inward FDI flow; no data available for outward FDI flow
Graph: Syria FDI flow
Note: Latest available data in 2011 for inward FDI flow; no data available for outward FDI flow

Source: UNCTAD

Date last reviewed: March 22, 2019

 

Foreign Direct Investment Policy

  1. Before the start of the conflict in 2011, Syria was gradually opening up its economy and moving towards a free market system.

  2. Before the start of the conflict, Syria introduced structural reforms, which included the renovation of the Commercial Code (2007), the Maritime Code (2008), the Finance Act (2004) and the Banking Act of 2004, which would allow the country to be able to move toward a free market economy. Furthermore, the Investment Law also gave incentives to foreign investors, including ownership of companies, import of machinery, transport and raw material free from customs duties.

  3. No reliable international data has been published regarding foreign investment in Syria since 2012, largely due to the country's ongoing conflict. This makes it difficult for investors to gauge the opportunities that might be present in the market.

Sources: WTO – Trade Policy Review, Investment Policy Hub, Syrian Investment Agency, Fitch Solutions

 

Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive Programme Main Incentives Available
Syria has eight free zones (Adraa, Airport, Aleppo, Damascus, Hasyaa, Lattakia Port, Tartous and Yaarobya), which allow for different production activities and services.

The government is also advocating policies for the development of industrial cities.
Although various incentives exist, such as lower customs duties and administration, as well as tax breaks, investors will face challenges arising from the conflict.

Sources: US Department of Commerce, Syrian Investment Agency, Fitch Solutions

Taxation – 2019
  • Consumption Tax: 1.5-40%
  • Corporate Income Tax: 10-28% (progressive)

Sources: World Bank, National Sources

 

Business Taxes

Type of Tax Tax Rate and Base
Corporate Income Tax
 
– Specific rates: 22% on joint stock and limited liabilty companies; 14% for joint stock enterprises which issue more than 50% of their shares to the public; 15% for insurance companies which issue at least 51% of their shares to the public; 25% to banks and insurance companies

– Companies falling outside these categories are taxed at a progressive rate ranging between 10% and 28%
Dividends – 7.5% on dividends issued by a non-resident entity

– Dividends issued by Syria-based entities are not taxed on distribution to another company
Capital Gains Tax – Capital gains are treated as taxable income and taxed at the standard corporate tax rate

– Gains on real property are subject to a tax rate ranging from 15-30% of the property's registered value
Consumption Tax – Syria has no value added tax, instead certain services and imported luxury goods attract a consumption tax, in a range of 1.5-40%
Surtax – A local administration tax of 4-10%, depending on the region

– A temporary reconstruction fee of 5% is imposed on all direct and indirect taxes except payroll tax
Stamp Duty – Ranges between 0.3% and 0.7%; imposed on transactions such as the formation of corporations and the execution of documents
Property Tax – Ranges from 14% to 60%, depending on the type of property

Sources: World Bank, Fitch Solutions

Date last reviewed: March 22, 2019

Foreign Worker Requirements

Foreign Worker Permits

Anyone wanting to work in Syria needs to obtain permission from the Ministry of Social Affairs and Labor.

 

Localisation Requirements

The security situation means that employers will be obligated to pay exorbitant insurance premiums for foreign staff, and may also be required to offer substantial hardship and danger pay premiums.

 

Visa/Travel Restrictions

Citizens of all countries require a visa to travel to Syria. Before 2014, citizens of many Arab countries did not require a visa, and citizens of many former Soviet states were allowed to obtain visas on arrival.

There are two types of entry visas: a six-month visa valid for one trip or multiple trips, which can be awarded for one year; and a three-month visa valid for one time only.

Sources: Government websites, Syrian Ministry of Foreign Affairs, Fitch Solutions

Risks

Sovereign Credit Ratings


 
Rating (Outlook) Rating Date
Moody's
 
N/A N/A
Standard & Poor's N/A N/A
Fitch Ratings N/A N/A

Sources: Moody's, Standard & Poor's, Fitch Ratings

 

Competitiveness and Efficiency Indicators


 
World Ranking
 
2017 2018 2019
Ease of Doing Business Index
 
173/190 174/190 179/190
Ease of Paying Taxes Index
 
81/190 81/190 85/190
Logistics Performance Index
 
N/A 138/160 N/A
Corruption Perception Index
 
178/180 178/180 N/A
IMD World Competitiveness N/A N/A N/A

Sources: World Bank, IMD, Transparency International

 

Fitch Solutions Risk Indices


 
World Ranking
2017 2018 2019
Economic Risk Index Rank N/A 199/202 195/202
Short-Term Economic Risk Score
 
24.2 27.1 32.7
 
Long-Term Economic Risk Score 27.6 29.1 31.5
Political Risk Index Rank N/A 198/202 198/202
Short-Term Political Risk Score 22.9 27.9 27.9
 
Long-Term Political Risk Score 21.7 21.7 24.2
Operational Risk Index Rank N/A 187/201 189/201
Operational Risk Score 27.1 28.2 26.6
 

Source: Fitch Solutions

Date last reviewed: March 22, 2019

 

Fitch Solutions Risk Summary

ECONOMIC RISK

Given the prolonged period of unrest in Syria, along with the displacement of millions of Syrians, we expect continued economic decline over the coming quarters. The Syrian economy has contracted to the size it was in the early 1990s. While regions held by the regime of Syrian President Bashar al-Assad will remain better off than those not under government control, business activity and state investment will remain stagnant, and living standards will continue to decline as the Syrian currency loses value.

OPERATIONAL RISK

Damascus undertook some key reforms to improve the country's business environment before the beginning of the civil war, such as allowing greater private investment in specific sectors through public-private partnerships. However, as long as the civil war continues, foreign investment will remain virtually non-existent, with only a few Iranian and Russian companies investing in government-controlled territory. Russia's entry into the Syrian civil war in September 2015 has reshaped the conflict, allowing the Syrian regime of President Bashar al-Assad to make sweeping territorial gains and reduce the conflict zone to the largely rural province of Idlib in the northwest, adjoining Turkey.

Source: Fitch Solutions

Date last reviewed: March 5, 2019

 

Fitch Solutions Political and Economic Risk Indices
 

Graph: Syria short term political risk index
 
Graph: Syria short term political risk index
 
Graph: Syria long term political risk index
 
Graph: Syria long term political risk index
 
Graph: Ghana short term economic risk index
 
Graph: Ghana short term economic risk index
 
Graph: Syria long term economic risk index
 
Graph: Syria long term economic risk index
 

100 = Lowest risk, 0 = Highest risk

Source: Fitch Solutions Political and Economic Risk Indices

Date last reviewed: March 22, 2019

 

Fitch Solutions Operational Risk Index


 
Operational Risk Labour Market Risk Trade and Investment Risk Logistics Risk Crime and Security Risk
Syria Score 26.6 42.9 23.8 27.0 12.7
MENA Average 47.5 49.3
 
48.0 48.7 44.1
MENA Position (out of 19) 17 15 17 17 17
Global Average 49.6 49.7 49.9
 
49.0 49.8
Global Position (out of 201) 189 146 191 183 196

100 = Lowest risk, 0 = Highest risk

Source: Fitch Solutions Operational Risk Index

 

Graph: Syria vs global and regional averages
 
Graph: Syria vs global and regional averages
 
Country
 
Operational Risk Index
 
Labour Market Risk Index
 
Trade and Investment Risk Index Logistics Risk Index Crime and Security Risk Index
UAE 72.7
 
67.8
 
79.0 68.7
 
75.3
 
Qatar 66.0
 
63.9
 
61.9
 
71.6
 
66.5
 
Bahrain 64.9
 
58.4 69.5 71.5
 
60.1
Oman 63.3 51.0 61.6 64.5 76.0
Saudi Arabia 61.6 63.0 62.1 62.7 58.6
Jordan 58.6 54.9 60.6 59.0 60.0
Kuwait 55.1 52.3 51.5 52.5 64.1
Morocco
 
53.2 39.8 63.5 54.8 54.6
Egypt
 
48.4 46.0 46.1 56.4 45.3
Tunisia 47.3 42.3 56.9 47.3 42.8
Iran 42.8 48.7 36.6 50.8
 
35.1
Lebanon 43.4 47.9 51.8 41.4 32.4
Algeria 41.5 44.0 31.2 42.9 47.9
Palestine 34.2 46.4 37.2 32.0 21.2
 
Libya
 
27.2 44.4 21.7 29.3 13.4
 
Syria 26.6 42.9 23.8 27.0 12.7
 
Iraq
 
27.0 43.7 24.4 28.6 11.3
Yemen 21.9 30.6 25.0 15.8
 
16.1
 
Regional Averages
 
47.5
 
49.3
 
48.1
 
48.7
 
44.1
 
Emerging Markets Averages 46.8
 
48.0
 
47.5
 
45.7
 
46.0
 
Global Markets Averages 49.6
 
49.7
 
49.9
 
49.0
 
49.8
 

100 = Lowest risk, 0 = Highest risk

Source: Fitch Solutions Operational Risk Index

Date last reviewed: March 22, 2019

Hong Kong Connection

Hong Kong’s Trade with Syria

Graph: Major export commodities to Syria (2018)
 
Graph: Major export commodities to Syria (2018)
 
Graph: Major import commodities from Syria (2018)
 
Graph: Major import commodities from Syria (2018)
 

Note: Graph shows the main Hong Kong exports to/imports from Syria (by consignment)

 

Graph: Merchandise exports to Syria
 
Graph: Merchandise exports to Syria
 
Graph: Merchandise imports from Syria
 
Graph: Merchandise imports from Syria
 

Note: Graph shows Hong Kong exports to/imports from Syria (by consignment)

Exchange Rate HK$/US$, average

7.75 (2014)

7.75 (2015)

7.76 (2016)

7.79 (2017)

7.83 (2018)

Sources: Hong Kong Census and Statistics Department, Fitch Solutions

Date last reviewed: March 22, 2019

 


 
2017
 
Growth rate (%)
 
Number of Syrian residents visiting Hong Kong 297 -11.1

Source: Hong Kong Tourism Board

 


 
2017 Growth rate (%)
Number of Middle East residents visiting Hong Kong 129,816 -2.5

Source: Hong Kong Tourism Board

Date last reviewed: March 22, 2019

 

Commercial Presence in Hong Kong


 
2016
 
Growth rate (%)
 
Number of Syrian companies in Hong Kong N/A N/A
- Regional headquarters
- Regional offices
- Local offices

 

Treaties and Agreements between Hong Kong and Syria

Syria has a bilateral investment treaty with mainland China that came into force on November 1, 2001.

Source: UNCTAD

 

Visa Requirements for Hong Kong Residents

A visa is required for Hong Kong residents.

Note: Hong Kong's Outbound Travel Alert (OTA) system currently categorises Syria as black, indicating a severe threat and to avoid all travel.

Source: Hong Kong Immigration Department

Date last reviewed: March 22, 2019

 

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