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In post-oil Syria, things are looking up

Reform is bringing benefits to the country — both in terms of economic growth and political openness.

Inflation has risen in recent years. A rising population is putting pressure on house prices in the towns and cities, which have also risen with real estate speculation and rural to urban migration, the latter in part due to drought in the country’s northeastern region.

Traditional national industries such as textiles are creaking to a halt, unable to withstand competition from cheap goods imported from outside — mainly Turkey and China. Agriculture, too, is suffering.

Meanwhile, the new economic openings are not as accessible to all as they could be. With the focus on professional services, new skills are needed in the workforce. Starting a business is no easy task for the average Syrian. The banking sector is relatively new and averse to risk-taking, making credit hard to attain other than for the well-off. Connections and corruption are additional factors to tackle.

Economic analysts say the situation is worsened because of the lack of a social security cushion; unemployment benefits do not exist and subsidies are ill-targeted.

The effects are not just economic; the situation is having knock-on social effects in the country. Traditionally, men must be able to afford a house before they marry. With house prices rising, that goal is taking longer to reach. Anecdotal evidence suggests that this is delaying the age of marriage.

All of which means Syria’s economic reforms need work to ensure the country’s wealth gap isn’t turned into a permanent feature.

“These people must catch up or there will be a problem,” said Sukkar. “It requires supporting education and entrepreneurship, changing the mindset of young people so they don’t want to leave and putting in effective support schemes.”

Many of these initiatives are underway. Subsidies are being replaced by targeted cash-transfer schemes, NGOs are offering credit to small and medium enterprises and social security plans are being developed.

The government is continuing to reform the business environment, removing some of the miles of red tape.

“We believe supporting small and medium enterprises will help the economy grow in a healthy way and reduce any inequality,” said Reem Hilali of the Ministry of Industry.

“The situation is not perfect yet, but it is improving.”

The issue is even more critical as Syria copes with a bulging youth demographic suffering from skills not competitive at an international level. Syria’s population — currently estimated at around 22 million — is set to rise to 30 million by 2025 according to estimates by Syrian Commission for Family Affairs.

If economic catch-up doesn’t occur, analysts warn there could be social and political unrest — something Syria will be keen to avoid.

http://www.globalpost.com/dispatch/middle-east/100411/syria-economy-assad-middle-east