Thanks to a wave of economic liberalization, undertaken since the beginning of Bashar El Assad’s presidency, the economic situation of the country has massively improved, the GDP more than doubling in five years and showing a growth rate of around 4% in the recent years. The country is moving progressively from a strongly state-controlled economy to a free-market economy where privatization plays an important part. The WTO has begun accession negotiation with Damascus in May 2010 and the country presently has the status of an observer. The country launched a reform of its banking system and a beginning of the process of fiscal consolidation. The Damascus stock exchange was opened in March 2009.

But the draught the country has been exposed to since 2008 has a tendency to darken the picture and disturb the fragile economic equilibrium. Agricultural crisis has lead to a relatively significant rural exodus (20 to 30% of migrations between 2007-2008) and especially to a 27% increase in the price of cereals and bread since January 2008, thus forcing the country to import wheat for the very first time. Since 2003, an immigration wave of Iraqi refugees has also had a large impact on the Syrian economy. Syria is weakened by a very high rate of demographic growth (+3.3% annually), which means the country needs to grow by almost 7% a year in order to reach full employment. Young people are particularly hit by unemployment (75% of the unemployed are between 15 and 24 years of age).

The financial crisis had a relatively low impact on Syria, partially due to its policy of insufficiency, which means that the banking system is not very well integrated into the international banking system and also to the US sanctions. In spite of its liberalization of the key banking and insurance sectors, public companies and central government continue to concentrate more than 50% of the total amount of loans granted by the banking system in 2010. The country has trouble limiting the impact of the crisis on inflation (15% increase in 2008) and as a consequence limiting the impoverishment of a part of its population (1/3 of the population lives below the poverty line).

Syria, still in full economic boom, exports mostly raw materials (crude oil, cotton, cereals and phosphates). Agriculture constitutes a pillar of its economy, given its large population and its struggle to reach self-sufficiency. The agricultural sector contributes nearly 22% to GDP and employs one-third of the active population; however, it remains a fragile sector, since it directly depends on climatic conditions and especially on water scarcity, key regional factor. Cropland has increased by more than 50% since 1970, largely because of government incentives and more efficient use of irrigation methods. The principal crops include wheat, potatoes, sugar beet, and barley. Large numbers of poultry, cattle, and sheep are also raised.

Industry has a relatively important place thanks to the textile, chemical and of course oil industry, the latter representing 14% of the Syrian GDP. The hydrocarbon sector is very important for the Syrian economy and contributes up to 65% to the country’s exports. Nevertheless, the country’s oil reserves are diminishing from year to year and although the increase of barrel price enabled a growth of 4.5% between 2006 and 2007, experts expect the Syrian oil wells to dry up by 2020. The manufacturing sector contributes 25% to GDP, with the production of handicrafts such as silk, leather and glass products.

The tertiary sector is well established (mainly tourism) and contributes more than 50% to GDP.

Since the late 1990s, Syria has been very open to international trade. In 2005, is signed a free-trade agreement with Turkey (in operation since 2007) and joined the GAFTA (Great Arab Free Trade Area), a regional free-trade zone, while an association agreement with the European Union was drafter in 2005, then in 2008 and has been ready to be signed since the fall of 2009.

Foreign trade represents about 70% of the country’s GDP. Last numbers published by Syria’s central statistical bureau for foreign trade date from 2008 and give the figure of 14.227 billion EUR of imports against 11.997 billion EUR of exports, i.e. a trade deficit of 2.231 billion EUR.

Exports rose by 12% per year on average between 2004 and 2010, while imports rose by 14% per year. It therefore seems that the global economic crisis did somewhat affect foreign trade, however its bases appear healthy enough to continue the policy of opening up economically.

Syria main exports are its oil resources (42% of exports in 2008), textile (16%), livestock and vegetables (12%), as well as food products (11%). Its main clients are the Arab countries, up to 51% with a particular intensification of trade relations with Iraq, Lebanon and Algeria, followed by the European Union with up to 34%, with Germany and Italy in the lead and France only taking the 6th place. In terms of imports, the most important position belongs to oil products, with up to 35%, and also to metals and fabricated metal products, followed by chemical industry, livestock and consumer goods. The two main suppliers are the European Union (29%) and Asia (25%), respectively.

Syria is commited to gradually opening its economy, moving froma a closed and centralised economy to a model approximating market economy.

In a particularly difficult regional context, the country is trying to to set up the mechanism of a market economy in order to regain the trust of foreign investors.

The Syrian economico-legal corpus has undergone extensive changes over the past decade. Structural reforms such as the renovation of the Commercial Code (2007), the Maritime Code (2008), the Finance Act (2004) or the Banking Act of 2004 helped to phase out the model of planned economy, which has been in force over decades.

The establishment of a private banking system and private insurance companies (domestic or foreign), opening the local market with import liberalization (gradual removal of tariff barriers to market access and reorganization of the customs administration with the assistance of the European Union) are all tangible results of the update of the country's legislative and fiscal framework. Syria has also established a number of industrial zones as an advantageous framework for foreign companies interested in relocating to the country.

Despite regional political instability (the proximity of Iraq, the role of Syria in Lebanon and tensions with Israel), inflationary trends (14.5% in 2008 but 5% in 2010) and a high unemployment rate ( about 20%), foreign investment has become more abundant.

According to UNCTAD, in 2009, Syria had an FDI stock of 5.6 billion euros, or 14.2% of its GDP. Syrian stock invested abroad amounted to 319 million euros or 8% of its GDP. Syria is therefore largely a creditor, with up to 5.3 billion euros. Seeking FDI is crucial for the government and its economic strategy of attracting FDI has made it essential to reform the banking system.