Syria’s real gross domestic product (GDP) is expected to increase by 1.6 percent in 2002 and by 3.2 percent in 2003, according to the Economist Intelligence Unit (EIU). Fiscal revenues, excluding loans, were forecast to rise by seven percent.
In a recently published EIU economic report on Syria, the unit predicted that 2002 will be a more difficult year financially for the state than 2001, with lower oil prices, lower tourism revenues, and slower demand for Syrian exports in line with the slowdown in the global economy. Domestic demand will remain generally sluggish, but the increase in government expenditures and continued growth of the agricultural sector will keep economic growth in positive territory this year.
The EIU stated that monetary policy in Syria remains inflexible and interest rates have long been fixed at around seven percent regardless of inflation or liquidity conditions. It noted that real interest rates have been too high and monetary conditions tight, which has contributed to stifling domestic investment levels over the past two years.
The EIU concluded that this interest-rate rigidity will be tested when private banks begin full operations in Syria, as authorities are unlikely to fully liberalize the interest-rate regime in the near future. It estimated foreign exchange reserves, excluding gold at $2.85 billion at the end of 2001, up 16.3 percent from $2.45 billion in 2000. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
