Syria Economy Facts

by ebizdir · Published January 30, 2023 · Updated February 22, 2023

Economical overview

Before the ongoing civil war, Syria had a relatively diverse economy with well-developed agriculture, good natural resources and strong traditions in trade and business. However, large sections of the population suffered from poverty and the attempts to reform the economy were hampered by corruption and powerful interests within the state and the military.

The Syrian economic system is a mixture of a centrally controlled social economy model economy and a market economy with privately owned companies. Most major industrial companies are state-owned, and the state controls or has a large stake in strategically important areas such as energy, mines, electricity and water as well as the financial sector and most banks. The state also determines the prices of important agricultural commodities. The mainly privately owned agriculture and smaller industries must also follow the five-year economic plans drawn up by the state.

Countryaah.com: Major imports by Syria, covering a full list of top products imported by the country and trade value for each product category.

The centralized economic system has resulted in an over-staffed public sector characterized by low productivity, low wages and extensive bureaucracy where corruption has flourished.

The state’s strong dominance has persisted despite the government implementing several economic reforms in the 21st century to try to reduce the state’s role and facilitate both domestic and foreign companies to operate. Tax relief was introduced for foreign investors in 2002. One year later, the ban on private individuals was lifted to hold foreign currency. In 2004, the first private banks were opened and in 2009 a stock exchange was opened in Damascus. However, the reform work was slow and did not increase wealth for the majority of the population, rather the gaps in society grew.

Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including SYR which represents the country of Syria. Check findjobdescriptions to learn more about Syria.

Developments since 2011

Since the outbreak of the war in 2011, Syria’s economy has deteriorated very sharply as the country’s two main sources of income – oil exports and tourism – have dwindled. Important oil fields have long been beyond the control of the government. Some have succeeded in regaining control of rebels, while some are in those parts of the country that received Kurdish rule during the war; the outcome is uncertain, although the government has the stated goal of regaining full control over the entire territory of Syria and carrying out military operations with Russian support. In a report for the Carnegie Middle East Center, in September 2019, it was calculated that domestic oil production could not cover more than a quarter of the country’s needs.

Syria previously had potential as a tourist country, thanks to its rich cultural heritage and determined efforts to increase tourism. After 2000, a number of new hotels were built, including many culturally historically valuable private homes in Damascus and Aleppo were transformed into exclusive hotels. Even many of the most famous historical monuments are now war-torn (see Culture).

An “de-industrialization” has occurred during the conflict years when many of the country’s companies have been forced to close, go bankrupt or subject to destruction and looting. Both skilled workers and capital have moved the country and agriculture and public sector share of GDP has risen sharply.

Oil and petroleum products were for a long time the most important export goods; in the mid-2000s, they accounted for about two-thirds of export earnings. Otherwise, agriculture is responsible for the largest revenues in the form of cotton, fruits and vegetables.

European countries have traditionally been the most important buyers of Syrian oil, so when the EU in the autumn of 2011 introduced a ban on buying Syrian oil products, it was a tough blow. The United States has applied financial sanctions against Syria since 2004. Since 2011, further sanctions have been introduced against leading people in the government and the army and against companies and institutions.

In response to the Western sanctions, President Assad declared that Syria could instead trade with countries such as Russia, China, Iran and other Arab states. In recent years, trade with Iran has increased sharply. The Iranian government has given Assad’s government loans and export credits worth billions of dollars and signed trade agreements that have been very favorable to Syria, thus strengthening the government side. Trade agreements have also been concluded with Iraq. However, this has not been able to compensate for the loss of trade with the EU. Total exports of goods were halved in 2011-2012 and have fallen sharply since then. Syria, which used to be an oil exporting country (see Natural Resources and Energy) now has to import oil. The same goes for cereals and other foods.

Even before the war, subsidies of basic goods were a costly item in the state’s accounts. One of the government’s first measures when the unrest began to be reported in 2011 was to raise wages and stop the unpopular economic cuts. However, this policy became difficult to maintain as government revenues declined and war expenditures increased. The government has therefore gradually been forced to cut subsidies, despite popular dissatisfaction.

During the war, the informal economy has grown sharply, with extensive smuggling along the country’s borders and between different areas of Syria, which have come under various rebel and militia groups. Smuggling also occurs on the government side. Large sections of the population depend on assistance (see Social conditions).

Added to this are the costs of reconstruction that the war creates, well above what a war-torn economy with large sections of the population on the run can do. It is uncertain how much help can be expected from allied states, especially Iran, which is under severe sanctions from the United States.

A large number of new laws have been adopted during the war years to facilitate the Syrian state’s compulsory redemption of land. Expropriation has been carried out by tens of thousands of properties, selected so that changes in ownership knock out supply and settlement for the regime’s opponents and make it impossible for refugees to return. According to several analysts, the neo-liberal orientation that the Assad regime embarked on before the war years has been deepened, so that the construction that takes place benefits Assadlojala businessmen. One sign that the regime is financially employed is that several wealthy businessmen in December 2019 had their assets frozen by authorities who claimed that the people were unjustly enriched during the war years. Among those on edge with the rulers are the president’s well-known cousin Rami Makhlouf, owner of Syria’s largest mobile phone operator.

Russian companies have had some benefits from the Moscow government’s support for Assad. This applies not least to contracts for the extraction of phosphate.