In 2011-12 we expect export earnings to grow to an average of US$13.3bn, although this is below the oil-price-related peak in 2008 of US$15.3bn. In recent years, drought has seriously constrained production, and therefore exports, of cotton and textiles. The drought has now eased, but the 2010/11 wheat crop is expected to be disappointing and a boll weevil infestation has affected the cotton crop.

Oil production, which is increasing at small fields but declining at the larger, mature fields, rose by 2.9% in 2010. Output will pick up further in 2011-12, averaging 392,000 barrels/day. The impact of changes in oil prices on the trade balance is limited, because Syria's imports of refined products are about equal in value to its exports of crude oil. Higher production in 2011, augmented by a rise in international oil prices to US$86/barrel in 2011-12 from US$80/b in 2010, will push up crude oil export revenue to an average of US$4.5bn in 2011-12, from US$4bn in 2010. New figures released by the Central Bank show an unexpected increase in the trade deficit in 2009, to US$3bn, or 5.9% of GDP, reflecting higher food prices combined with lower than envisaged agricultural production. Our estimate for the trade deficit in 2010 has therefore been revised up to US$3.3bn, or 5.8% of GDP, and we forecast that the deficit will average US$3.3bn, or 5.1% of GDP, in 2011-12.

The non-merchandise surplus is set to expand in 2011-12 as Syria becomes increasingly integrated internationally. In particular, tourism receipts will grow as a result of improving infrastructure and an increase in tourist arrivals from elsewhere in the Middle East. This will help to narrow the current-account deficit to an average of around US$400m (0.6% of GDP) in 2011-12.