AnalysisHomeMunther Khaddam

Syrian economy before 2011

Official statistics indicate that gross domestic product, which amounted 86,6 billion Syrian pounds (SYP) in 2000, became about 129 billion Syrian pounds in 2010 at the constant prices of 2000. In other words, gross domestic product increased by about 49% in 2010 compared to that of 2000, with an existing cumulative annual growth rate of about 4.9% (without deleting population growth). The per capita share of it amounted to 53,092 and 65,838 SYP, respectively. This means that the per capita share of 2010 increased by about 24% in 2008 compared to 2000.

Looking at the composition of the gross domestic product of 2010, it becomes clear that agriculture sector contribution in it amounted to about 17%, while the contribution of industry was about 22%, and construction was 4%, with a total of about 43%. They are the wealth-producing sectors, while other sectors such as services, finance, insurance, electricity, water, and transportation formed the rest percentage.

The same data shows that the composition of gross domestic product at the market price has witnessed a slight change between 2000 and 2010 and beyond. While the agriculture contribution, which reached about 25% in 2000, became about 17% in 2010. As for industry, its contribution increased from 29% in 2000 to 22% in 2010 (the largest share of which was that of the extractive industry).

Syrian economy between 2000 and 2004 entered its worst crisis after the crisis of 1984-1990. As growth has stopped in most of the main economic branches that produce wealth, it has even started to decline at great rates. The data of the Central Bureau of Statistics and the analyzes of the State Planning Commission show a decline in the existing economic growth (without deleting the population growth rate) from 5.8% in 1990-1996, to 2.9% in 1997-2004. It almost becomes negative if the population growth rate is removed from it.

According to the data and analyzes of the State Planning Commission, and that of the statistical group for 2008 show that agriculture, industry, extractive industry, and transportation are the sectors that contributed to the growth in the national economy during the period 1990-1996, while the contribution of industry, especially the manufacturing industry, was negative during the period 1997-2008. They are value-added profitable sectors.

It is remarkable that the contribution of the extractive industry, transportation and services to growth by about 70% during the period 1997-2004, which are sectors, some of which are with low added value, such as the extractive industry, and some of them do not contribute to real growth, but rather to the distribution of what is produced, so they are considered sectors that lead to inflation.

The relatively high growth rate during 1990-1996 is primarily due to the relatively favorable political conditions in the region after the process of liberating Kuwait and the start of the Madrid Conference to bring peace to the region, in addition to the improvement of the internal investment climate after the issuance of Law No. 10 of 1991 and the start of producing light oil in Deir ez-Zor oil fields, which encouraged the private sector to invest.

As for the reasons behind the low growth rate during 1997-2004, they are many, including the deflationary policy followed by the government, the reduction of investment funds, the decline in the implementation of planned projects, the turmoil in the political atmosphere in the region, and losing hopes of achieving peace. In addition to the continued weakness of the economic public sector, and the spread of corruption in public institutions, which was extensively expressed by the weak investment efficiency.

The same data indicates that the share of wages and salaries in the gross domestic product from 1970 to 2010 was around 40%, while the share of profits and revenues was 60%. These data take a serious indication in terms of narrowing the market and weakening aggregate demand, especially if we know that those who rely on wages and salaries are about 90% of society, while those who receive profits and revenues are only about 10% of society. 

The sharp polarization in the society as a result of the unfair distribution of domestic product, the decline of incomes in general, the increase in the marginal propensity to save, the weak marginal propensity of invest, and the spread of poverty, all of these contributed to the decline in the level of aggregate demand and the narrowing of the market.

In short, we can say that the economy in Syria during that period was suffering from fundamental structural imbalances that increased its dependence on revenues sectors rather than profit sectors. Because of its underdeveloped technical level, weak efficiency of its organization and management, and poor performance, its overall and sectorial growth rates have declined, the marginal sufficiency of capital and labor productivity declined in all sectors.

In the next article we will shed light on the parallel economy in Syria.

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