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Syrian Economy Severely Affected By Crisis: EU Report

The Syrian economy has been severely affected by the crisis and is expected to continue to decline, according to the country and regional reports on the progress of the European Neighborhood Policy (ENP) in 2012.

According to the Economist Intelligence Unit (EIU), GDP contracted by 3.4% during 2011 and a further 15.2% in 2012, says the report, published on Wednesday. Others estimate the decline to have been even higher. The fighting has deepened the differences from region to region and even within regions. Productive sectors have almost come to a standstill due to insecurity in agricultural as well as industrial areas. Disrupted transport links, electricity and fuel infrastructure make distribution dangerous, cumbersome and expensive, which is reflected in growing examples of shortages.

The Syrian currency has devaluated approximately 60% since the beginning of the conflict, but has not yet collapsed. Public services have been substantially reduced and in many areas are no longer available. Investment expenditure is almost halted, but the government continues to pay salaries and pensions despite speculations since 2011 that public reserves were about to be depleted.

The situation for all Syrians is dire due to the combination of extreme violence, inflation, unemployment, reduced public services, shortages, massive internal displacement and increasing numbers of refugees to neighboring countries, the European Union says.

According to the EIU, the value of Syria's exports dropped 52% during 2012 while its imports decreased by 43% due to the deteriorating security environment, reduced economic activity, declining demand and international sanctions. The oil import bans and the broad restrictions on financial transactions and the use of the dollar that make any transactions through the regular financial system very difficult has significantly crippled the Syrian economy, EU says.

The "ENP annual package" was presented by EU High Representative Catherine Ashton and EU Commissioner for Enlargement and Neighborhood Policy Štefan Füle.

Syria continues to be embroiled in an armed internal conflict that causes far-reaching harm and damage. While all bilateral cooperation with the Syrian regime has been suspended, the Syrian population further benefits from EU assistance, especially the large-scale humanitarian aid.

by RTTNews Staff Writer

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