Country Report Syria September 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 and leading Arab states are expected to improve gradually, although rapprochement will be overshadowed by heightened tension between the US and Iran, Syria's closest ally.
• Relations with Lebanon and Iraq are likely to remain turbulent, and there is little prospect of meaningful peace talks taking place with the hardline Israeli government and leading to a return of the Golan Heights.
• Syria's drive to increase foreign investment inflows will be undermined by the global recession, and Syria's real GDP growth will fall from 5.1% in 2008 to 2.2% in 2009, before recovering slightly to 3.8% in 2010.
• Inflation will decline sharply from its 2008 peak, to an average of 5.9% in 2009-10, as the global economic slowdown depresses commodity prices.
• The current-account deficit will widen to an average of US$1.4bn (2.5% of GDP) in 2009-10, largely because of an increase in the trade deficit.

Monthly review

• Mr Assad has received a visit from another US delegation, which included a senior general. However, the US president has not yet eased US sanctions on Syria, extending for a year restrictions against two Syrian officials.
• Mr Assad has reaffirmed his ties to Iran in a visit to congratulate the president, Mahmoud Ahmadinejad, on his controversial re-election. France has thanked Syria for its role in mediating the release of a French citizen detained in Iran.
• The Iraqi prime minister, Nouri al-Maliki, visited Damascus on August 18th. However, a week later Iraq recalled its ambassador to Syria over allegations that a series of bombings in Iraq on August 19th was orchestrated from Syria.
• Assef Shawkat, Mr Assad's brother-in-law, has been shifted from the position of chief of military intelligence to that of deputy chief of staff of the Syrian armed forces.
• Tourism is booming in Syria, up by 16% year on year in January-July. In this context, Abdullah al-Dardari, the deputy prime minister, has announced plans to amend the investment law to increase incentives to develop tourism.
• The Syrian Petroleum Company has said that crude oil and condensate production averaged 377,000 barrels/day (b/d) in the first half of 2009, a decline of only 1,250 b/d on the same period of last year.

This report covers the following industry codes:
SIC Code: 49;10;37;53;60;2834;80;48;59;70
NAICS Code: 22;212;336;44;52;3254;62;517;72