Syria Today | Statistical Failure

Figures highlight the economic deterioration during the former prime minister's tenure.

By Tayssir Raddawi
Photo Carole al-Farah

A good place to begin a discussion of Syria's economic policy is to look at figures during Prime Minister Muhammad Naji Otri's tenure from 2003 to 2011. Comparing numbers from the beginning of his term to those from when it was terminated helps showcase the country's economic successes and failures.

In the early part of this century, under Otri's government, Syria was left out of the worldwide economic boom, even though other countries in the Arab World benefitted notably during this period due to a surge in oil revenues. The real GDP growth rate has stood at about 4.5 percent on average over the past five years, far less than the targeted 7 percent of the 10th Five-Year Plan. Over this time, the Syrian economy deteriorated due to four main factors, namely unemployment, poverty, the gap between wages and prices and corruption.

When the Otri government took office in 2003, the unemployment rate was 9.5 percent and the objective was to lower it to 8 percent. Otri's government, however, left office earlier this year acknowledging that the unemployment rate had reached 10.9 percent. Most economists, however, estimate the real figure to be 18 to 20 percent.

The percentage of people living under the lower poverty line when Otri's government took office also increased. It was 11.2 percent of the total population in 2003, and by the time the government left office, this figure had reached 12.5 percent, according to a UNDP study. People living under the upper poverty line – defined as when a person cannot meet all his or her needs such as education, health care and suitable housing – increased by 10 percent from the beginning of the Otri government and its end.

The gap between the wages and prices also increased 50 percent during the same period. Further, the growth rate of GDP per capita dropped from about 2.7 percent during the early years of the government's term, to 2 percent shortly before it left office. Moreover, corruption became more rampant, as Syria dropped on Transparency International's country ranking from 68 in the beginning to 127 when the government left. Finally, inflation was about 7 percent when the government started and reached more than 15 percent by 2008.

The deterioration of the Syrian economy is because its main growth catalyst is consumption rather than investment. The share of public investment in GDP is no more than 20 to 25 percent, while it exceeds 30 to 35 percent in many countries comparable to Syria in terms of living standards. This is one of the reasons that growth could not lower the unemployment rate, as consumption-driven growth does not create jobs.

However, there have been some positive economic developments in recent years. Syria has maintained a small budget deficit, low external debt and a relatively stable exchange rate for the Syrian Pound – although some would argue such stability damages exports. Also on the positive side was the reduction of the size of the oil sector in economic growth and the increasing – albeit slightly – contribution of manufacturing industries.

The main issues aggravating the problems of unemployment, poverty and the gap between wages and prices are weak investment due to governmental bureaucracy, a lack of judiciary independence, corruption and business monopolies. These issues require government reform and drastic changes in the prioritisation of public expenditure in favour of eduction and health services for the poor.

The current unrest is due to unemployment among the youth, poverty in remote areas, inadequate salaries and wages and corruption.

Tayssir Raddawi is dean of the Faculty of Business Administration at Arab International University and former head of the Syrian Planning Commission.