After four consecutive years (1990-93) in which real GDP growth averaged 7-8 percent, real GDP growth in 1994, 1995, and 1996 averaged between 4 and 6 percent. Oil exploration and production, bumper agricultural harvests, increased private investment, and large post 1990 aid flows provided the impetus to Syria's growth spurt in the early 90s. While 1995/96 again saw record agriculture harvests, there was a decline in oil production, foreign aid, and investment levels. A liquidity problem originating with the collapse of several private financiers in Aleppo continues to stifle both consumer demand and private investment activity. Recent Government policies helped reduce and control the inflation rate at approximately 10 percent.
Looking ahead, agricultural harvests look good, and summer payments to farmers of nearly $1 billion will spur consumer demand in the fall. Electricity supplies continue to improve, encouraging industrial productivity gains. The trade deficit, which has grown in recent years, may fall. According to trade sources, the number of import permits issued thus far in 1997 is significantly lower than the same period last year, while exports may improve if higher oil prices offset production declines.
Intrinsically, the Syrian economy has much to offer investors: A highly-educated, experienced managerial class, a productive and technically competent workforce, inexpensive raw materials, and a low to moderate cost of living. Moreover, in 1996, the government slightly devalued the currency and initiated bank reforms that expanded access to foreign currency accounts. Moreover the government is planning to enact major economic reforms, such as unifying exchange rates, resolving debt problems, developing the banking and insurance systems to, and reopening the Damascus stock exchange to help Syria compete effectively in world markets.
Blessed by a rich cultural heritage and a Mediterranean coastline, Syria possesses considerable potential for tourism. In addition, the transportation sector will need to expand to meet increased industrial production. Finally, growth in financial services could be dramatic following liberalization of this sector if it occurs in the near future.