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Syria & Sanctions
Syria & Sanctions

Report: Unrest-hit Syrian Economy to Shrink 2.0 percent

(Dp-news)

WASHINGTON- According to the IMF's quarterly World Economic Outlook, Syria's gross domestic product will register a 2.0 percent contraction, compared to growth of 3.2 percent last year.

Syria’s economy will shrink and oil importers across the region face “chronically high unemployment” amid social unrest and economic stagnation, the International Monetary Fund said today.

“The political turmoil has seen risk premiums rise and private financing and tourism receipts fall” throughout the region, it said. “Any intensification of the political crises would exacerbate the economic plight of the region.”



The International Monetary Fund said Tuesday it expected the economy of unrest-hit Syria to contract by 2.0 percent this year as the international community tightens sanctions against Damascus.

Syria's current account deficit will also widen from 3.9 percent of GDP in 2010 to 6.1 percent this year, the Fund said.

In April, less than a month after protests began against the regime of President Bashar al-Assad, the IMF had forecast 3.0 percent growth in 2011 and 5.1 percent in 2012.

Egypt’s economy is forecast to grow 1.2 percent this year and 1.8 percent in 2012, the IMF said. Libya was not included in the IMF report due to continued political uncertainty.

The region’s countries should adopt economic policies that establish “strong institutions to stimulate private sector activity,” broaden access to economic opportunities and address “chronically high unemployment, particularly among the young,” the IMF said.

While higher social spending this year among the Middle East’s oil producers is stimulating their economies, it also poses inflation risks, according to the IMF. Inflation in Saudi Arabia, holder of the world’s biggest oil reserves, will stay at 5.4 percent this year, while prices in the United Arab Emirates will rise 2.5 percent, up from 0.9 percent in 2010, it said.

Earlier on September, Syrian Finance Minister Mohammed Jleilati said unrest and sanctions were putting pressure on the economy, but said GDP would still grow by around one percent after what he said was 5.5 percent last year.

He also downplayed the long-term impact of EU sanctions on Syrian oil exports, saying 70 percent of the country's production is refined locally.

Syria produces 387,000 barrels per day and its exports accounted to around 110,000 bpd.

The country is expected to easily find new destinations for its oil exports banned from Europe as energy-hungry nations, such as China and India, could jump on the chance to buy the available crude.

Unrest has also deprived the country of a vital inflow of tourism, mainly Gulf nationals who usually flock into the Mediterranean country in summer.

Jleilati, however, insisted that although "media exaggeration" affected the number of foreign tourists, hotel occupancy was around 40 to 50 percent thanks to domestic tourism.

The United Nations estimates the crackdown on pro-democracy protests has killed 2,600, mostly civilians, since March, and rights groups say thousands of people have been arrested.

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