Country Report Syria April 2009

Outlook for 2009-10

• The president, Bashar al-Assad, is expected to remain in power in 2009-10 and, despite some tensions within the regime, there is no significant threat to his rule. Some limited domestic political reform is expected.
• Relations with the US are forecast to improve, albeit gradually, although any open Syrian interference in Lebanon would work against this and would also jeopardise recently restored relations with a number of leading Arab states.
• Although peace talks between Israel and Syria may resume once Binyamin Netanyahu is installed as the new Israeli prime minister, it is unlikely that the Golan Heights will be returned to Syria within the outlook period.
• Syria's drive to increase investment and boost tourism will be undermined by the global economic downturn, with real GDP growth falling from 4.8% in 2008 to 2.6% in 2009, before recovering slightly to 3.6% in 2010.
• Inflation will decline sharply from its 2008 peak, to an average of 8.1% in 2009-10, as the global economic slowdown depresses commodity prices.
• The current-account deficit will widen to around US$0.9bn (1.7% of GDP) in 2009 and further to around US$1.1bn in 2010.

Monthly review

• In a significant diplomatic outreach, two senior US administration officials, the acting assistant secretary of state for Near East affairs, Jeffrey Feltman, and the national security adviser, Dan Shapiro, visited Syria on March 7th.
• Reconciliation with Saudi Arabia moved forward in March, when Mr Assad visited Riyadh for the first time in two years, to attend a "mini-summit" with the Saudi king, the president of Egypt and the emir of Kuwait.
• Relations between Syria and Lebanon have moved forward after Syria appointed an ambassador to Lebanon, Ali Abdel-Karim Ali, and Lebanon opened an embassy in Damascus.
• Syria is ranked 156th out of 167 in the Economist Intelligence Unit's democracy index, placing it ahead of Saudi Arabia and Libya but behind other countries in the Middle East region.
• The Damascus Securities Exchange was launched on March 10th. Six companies have listed with a total market capitalisation equivalent to 1% of GDP. Trading in the first two weeks was weak but is expected to strengthen.
• Diesel consumption has fallen sharply, by about 40% year on year, as a result of the sharp increase in prices introduced in May 2008.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;70;47
NAICS Code: 22;72;48