Outlook for 2011-12

• Despite the threat of contagion from Tunisia and Egypt, the president, Bashar al-Assad, is expected to remain in power in 2011-12. Some limited domestic political reform is expected.
• Syria's domestic economic and political profile is similar to that of Tunisia and Egypt, but there are also major differences. Syria's posture of resistance lends the regime some legitimacy, and fears of sectarian conflict will deter dissent.
• The rapprochement with the US and leading Arab states will be tested by the collapse of the Saudi-Syrian deal to shore up political stability in Lebanon and US reassessment of its Middle East policy following regional popular unrest.
• The Economist Intelligence Unit has revised its estimate for Syrian real GDP growth in 2010 upwards to 4.5%, in line with new Central Bank of Syria data. We forecast an average rate of growth of 4.7% in 2011-12.
• The liberalisation, privatisation and diversification of the centrally planned economy will continue, despite opposition from within the regime.
• Following the release of new Central Bank figures, we have revised up our forecast for the budget deficit, to an average of 3.5% of GDP in 2011-12.
• We forecast that inflation will rise to 7.1% in 2011 as global commodity prices increase, but fall to 2.4% in 2012 owing to the deflationary effect on rents of Iraqis returning home and a helpful base effect.

Monthly review

• Despite popular anti-government unrest in neighbouring states, Mr Assad has claimed his regime is secure because of its "popular" foreign policy. He has nevertheless offered a few cosmetic concessions such as legalising Facebook.
• Syria witnessed one public demonstration on February 17th, sparked by a specific incident of police brutality in central Damascus, the capital.
• Tal al-Mallouhi, a 19-year-old blogger arrested in 2009, was sentenced to five years in jail on charges of spying for the US.
• Mr Assad has passed three decrees with the apparent aim of combating inflation, in reaction to rising global commodities prices.
• The Ministry of Finance issued its first government securities of the year on February 14th and published a schedule for issuing Treasury bills for 2011. The total value of the issuance was S£30bn (US$650m).
• Trade figures issued by Turkstat, the Turkish statistics agency, have shown that exports to Syria rose by 30% year on year in 2010 to US$1.85bn, making Syria the seventh-largest market for Turkish goods in the Middle East.

Despite the fall of the governments of Tunisia and Egypt in early 2011, and the continuing popular unrest in other Middle Eastern countries, the Economist Intelligence Unit expects the Syrian president, Bashar al-Assad, and his ruling Baath party to retain their grip on the country, supported by key elements in the security services. The core of the elite is drawn from Mr Assad's Alawi sect, and any move against him could endanger its hold on power. Resentment of Alawi rule and friction between reformers and conservatives mean that tensions within the regime are likely to persist.

Only limited progress is expected on political reform in 2011-12. Although the possibility of domestic dissent will provide the incentive to make at least a few cosmetic changes, it is hard to envisage any steps being taken that would significantly diminish the Baath party's hold on power. Mr Assad initially advocated political reform when he came to power in 2000, but he has acknowledged that the pace of change has been slow. He has pledged to increase popular participation in the political process by introducing a political parties law, which would create a second chamber of parliament, the Majlis al-Shura-in addition to the existing lower chamber, the Majlis al-Shaab. He also pledged to devise a local administration law that would introduce greater decentralisation. However, the security and intelligence services, which are pervasive and effective, will continue to arrest activists who demand democratic reform; they have focused particularly on online activists since the regional unrest began. Syria faces numerous accusations of torture and unfair trial of political prisoners. The various opposition-in-exile groups and domestic critics are unlikely to pose a substantive threat to the government.

Is the Syrian president immune?

As the region is rocked by popular protests that have already brought down the autocratic rulers of Tunisia and Egypt, Syria's president, Bashar al-Assad, has seemed outwardly confident that his own authoritarian regime is not in danger. Speaking to The Wall Street Journal on January 31st he predicted that Syria would remain stable and avoid the popular unrest seen elsewhere in the Arab world because its foreign policy was more aligned with the will of its people than the pro-US stances of Tunisia and Egypt. This appeared to be borne out on February 5th when a Syrian "day of rage", organised via the Internet by Syrian exiles and opposition members to mimic similar successful protests in Egypt and elsewhere, drew barely a handful of demonstrators. However, since then the dissent has spread across the Arab world in the wake of the fall of the Egyptian president, Hosni Mubarak, including to Bahrain, Algeria, Morocco, Yemen and Libya. Is Mr Assad's confidence in his own regime's immunity justified?

The president's explanation that it is its popular foreign policy that has insulated his regime from popular discord offers an only partial explanation of the relative calm seen in Syria so far. Certainly Syria's posture of resistance towards Israel and Western imperialism has given the state a popular legitimacy that pro-Western Tunisia and Egypt lacked. However, it is notable that very few anti-Western or even anti-Israeli slogans were being shouted on the streets of Cairo or Tunis, with protesters focusing on domestic issues such as jobs, corruption and democracy. In these areas, Syria certainly shares many of the features with the countries that have witnessed unrest. The young population faces inequality, high unemployment and rising food prices, and there is widespread regional poverty. Moreover, the country has been run by the same ruling party for four decades, and there is corruption and rent-seeking among those close to the ruling family.

However, there are also key differences with Tunisia and Egypt other than just foreign policy that have made unrest less likely in Syria. Although the possibility of tawrith, or dynastic succession, has driven unrest across the region, particularly in Egypt and Libya, the fact that Mr Assad succeeded his father ten years ago means that he has had the chance to establish his own legitimacy. He retains the support of multiple intelligence agencies, making a coup unlikely. Unlike relatively homogenous Tunisia, Syria is a melting pot, with a Sunni Arab majority alongside Alawis, Christians, Ismailis, Druze, Kurds and Armenians, as well as Palestinian and Iraqi refugees. There is a fear on all sides that any revolt against the regime could descend into sectarian conflict, as seen in neighbouring Lebanon and Iraq. Supporting these fears are memories of the last time the regime was challenged-a Sunni Islamic insurgency that ended in the 1982 siege and bombardment of Hama, a city to the north of Damascus (the capital), in which thousands of people died.

Underpinning all of this is Mr Assad's personal popularity. The president retains the reputation of being an approachable moderniser who has overseen a decade of gradual market liberalisation, giving Syrians access to such luxuries as the Internet, mobile phones and satellite television, previously forbidden under Mr Assad's sterner and more feared father, Hafez al-Assad. Though segments of the regime are widely disliked, notably the feared security services and the police, Mr Assad is largely immune from public resentment. An example of this was on February 17th when several hundred from the Hariqa district of central Damascus protested against regime brutality, allegedly shouting pro-Assad chants while simultaneously complaining of police torture.

Yet Mr Assad does have increasing reason to be nervous if not yet worried about his position following the wave of recent revolts in other Middle Eastern states. Although he enthusiastically welcomed the fall of Egypt's ruler as a blow to the US-Israel regional alliance, the spread of unrest to Bahrain, Yemen and, especially, Libya, as well as Syria's ally, Iran, raise the possibility that the whole region could undergo democratic transformation, and not only those with unpopular foreign polices as he maintains. The Economist Intelligence Unit still expects Mr Assad to remain in power over the forecast period, although he may face growing dissent, particularly if more regimes are toppled, and if successful democratic governments begin to be established across the region. Unfortunately for Mr Assad, Syria's parliamentary election is due this April and, with the constitution guaranteeing the ruling Baath party two-thirds of the seats, it will provide a very visible example of how unrepresentative and undemocratic the regime is. Another potential source of embarrassment could be the president's term in office. A by-product of the recent regional unrest has been the trend that, to avoid dictatorships, constitutions are being amended to limit future presidents to only two terms in office-a move already seen in Egypt and Tunisia. Mr Assad is currently midway through his second seven-year term and would have expected to stand again, unopposed, in 2014. However, to do so might place him quite obviously out of step with regional trends and diminish any carefully built personal popularity. Mr Assad may seem immune from protest at the moment owing to factors unique to Syria that separate it from other Arab states. However, although this may sustain him in power for now, inaction on political reform could be storing up problems for the future.

The next parliamentary election will be held in April, but Mr Assad's Baath party and its allies are guaranteed two-thirds of the 250 seats, and there is little popular interest, as the primary role of the parliament is to rubber-stamp presidential decrees. The parliament proposes a presidential candidate every seven years who is then voted on in a referendum. Mr Assad was confirmed for his second term as president in 2007 and is expected to stand for re-election in 2014.

After facing diplomatic isolation in 2005-07, Syria has developed better ties with Western and regional states. However, the collapse of the Saudi-Syrian initiative to bolster political stability in Lebanon in January will test Syria's relations with Saudi Arabia and the West. The fall of the Lebanese national unity government and subsequent nomination of Najib Mikati as prime minister, who is close to both Syria and Hizbullah, a Lebanese militant group and Syrian ally, marks greater Syrian involvement in its neighbour. However, Syria is nervous of Hizbullah's growing independence, and Hizbullah is wary of being used as a bargaining chip by Syria.

Despite these developments, the EU is now ready to sign a long-delayed Association Agreement, and final negotiations are ongoing. Relations with the US have improved, and although US sanctions on Syria were renewed in May 2010, the US has withdrawn its objections to Syria's accession to the World Trade Organisation, and the US ambassador, Robert Ford, finally took up his position on January 16th. However, Syria's continued alliance with Iran and its support for Hizbullah and Hamas, the Palestinian group that controls Gaza, present ongoing difficulties. There is also opposition to closer ties with Syria within the US Congress. Regional unrest will prompt further debates within the US administration over its Middle East policy, which could affect relations with Syria. An investigation by the International Atomic Energy Agency into Syria's alleged nuclear programme also poses a threat.

Talks with Israel are unlikely to yield results, despite recognition by the US of Syria's importance to the peace process. Syria has shown a willingness to resume peace talks if based on Israel's full withdrawal from the Golan Heights (captured from Syria in 1967). However, there is little support in Israel for a withdrawal. Syria would be required to end its alliance with Iran and its support for Hizbullah and Hamas, as part of any agreement, which would be politically difficult but not impossible.

The gradual liberalisation of Syria's centrally planned economy is expected to continue under the leadership of the deputy prime minister for economic affairs, Abdullah al-Dardari. However, the economic debate remains highly charged, and liberalisation will be hindered by opposition from influential officials. Some within the Baath party are concerned about the negative impact of reform on poverty, and the fear of unrest will probably strengthen their hand. Some members of the business elite benefit from the status quo and might also resist change.

The overriding policy challenge will be to offset the impact of the long-term decline oil production (despite a small increase in 2010), by developing other sectors of the economy, particularly those that boost export earnings. Moves intended to increase investment include offering infrastructure investment opportunities to private investors, expanding the Damascus Securities Exchange, relaxing foreign-currency restrictions and boosting bank lending. The introduction of Treasury bills in December 2010 is an indication that financial reforms are moving forward, albeit slowly. Plans to introduce a public-private partnership law to aid financing of investment projects have been announced. There are plans to cut government subsidies, particularly for fuel, although the government has also increased heating fuel allowances for state employees and approved means-tested cash benefits, partly to soften the impact of price rises.

The government has announced that it expects the fiscal deficit to average around 6% of GDP in 2010-12. However, government expectations for revenue and oil prices tend to be conservative, and the government usually fails to disburse its spending allocations fully. We estimate that the budget deficit was actually 4.5% of GDP in 2010. In 2011 we expect the deficit to contract to 1.7% of GDP, further below the projection of the government, which has not accounted for windfall revenue from converting existing mobile-phone contracts into licences and awarding a licence to a third operator. In 2012 continued strong growth in capital expenditure-following the government's five-year plan to boost investment-without exceptional increases in revenue will lead to a widening of the deficit to 5.3% of GDP. Plans to reform public enterprises-most of which are unprofitable-by transforming them into autonomous companies with their own budgets should have a net positive impact on the public finances, and some privatisations are possible.

The Central Bank of Syria is expected to continue to implement monetary reform, gradually gaining greater autonomy. The Ministry of Finance has begun issuing Treasury bills to establish a local bond market. Interest rates were lowered by 50 basis points in mid-January to stimulate investment, following cuts in January 2009 and August 2010. The authorities seem relatively unconcerned about rising inflation. To encourage investment, the Central Bank is likely to reduce the restrictions on foreign-currency transactions-two decrees, which facilitated foreign-exchange transactions, were issued in November 2010. All such measures will help to develop the banking sector, in which privatised banks (which can now be 60% foreign owned) are playing an increasing role.

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We have revised up our estimate for real GDP growth in 2010 to 4.5%, as strong government spending and private consumption supported the economy more than expected. This increase to our estimate was based on higher than previously expected oil production, growth in exports to Iraq and increases in services, notably tourism. We forecast growth of 4.8% in 2011 and 4.5% in 2012, which will be driven by rising foreign investment as the economy is opened up. This, combined with a government focus on capital spending, will push up fixed investment, although the rate of expansion in government consumption and capital expenditure will slow during 2012. Private consumption will pick up as the private sector expands and an expected recovery in agriculture in 2011 boosts incomes. However, if there were a significant improvement in security in Iraq many of the Iraqi refugees in Syria (estimated at between 500,000 and 1m) might return home, depressing consumption. Growth in trade will also pick up in 2011-12 as Syria becomes more integrated into the global economy. There is a risk that the instability that has affected countries in the region could spread to Syria, hindering economic activity.

On the sectoral side, a poor harvest in 2010 has held back agriculture, with cotton production down by 25%. Although there should be some recovery in 2011-12, water shortages will remain a risk. A government investment drive will boost industry, construction, transport and electricity generation. This will be augmented by investment in the oil and gas sector, which will help to limit declining output in mature fields and boost production in new fields. There will also be an increase in cement production in 2011. Securing finance for some projects may be difficult, especially in commercial real estate where there are concerns about overheating. Services will continue to grow, driven by an increase in tourist arrivals, especially from Arab states following instability in Egypt.

Consumer price inflation rose unexpectedly to 6.9% at end-2010, driven by rises in food and beverage prices, which are 40% of the overall index. It is expected to average at 7.1% in 2011, as global commodity prices soar. Average inflation will then ease to 2.4% in 2012, owing to a stabilisation or decline in the number of Iraqi nationals in Syria, falling commodity prices and a helpful base effect.

The Syrian pound has been loosely pegged to the IMF's special drawing rights since October 2007 and is tightly managed by the Central Bank. The authorities are unlikely to let the pound float freely, as they value exchange-rate stability. Weakness in the euro zone (the euro is a major component of the Central Bank's currency basket) caused the pound to depreciate against the US dollar in the first half of 2010, although it has recovered since, resulting in an average rate of S£46.4:US$1 in 2010. Worries about the euro in 2011 will lead to a slight depreciation of the pound against the dollar, and we forecast that it will average S£47:US$1 in 2011-12. The Central Bank has healthy foreign-exchange reserves (equivalent to about 13 months of import cover), leaving it well placed to maintain control of the currency.

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.

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The Syrian president, Bashar al-Assad, has expressed sympathy with the protests that have swept through the Arab world following the popular uprising in Tunisia that resulted in the overthrow of the regime of Zine el-Abidine Ben Ali in mid-January. In an interview with The Wall Street Journal on January 31st, Mr Assad acknowledged that Syria shared some of the symptoms that had made people desperate for change in Tunisia and Egypt, and that part of the reason was internal failures of the governments concerned, including his own. However, he also blamed the West for much of the discontent in the region. Mr Assad said that his own government was more secure than some of the other Arab regimes because its foreign policy was more closely aligned with the beliefs of its own people, with respect to issues such as the Israeli-Palestinian conflict and the US-led invasion of Iraq. He talked at length about the measures he had taken to create a platform for reform, for example through allowing private newspapers and fostering the spread of the Internet. (In February the government lifted its ban on Facebook, a social networking site.) However, he carefully avoided making any commitment to reform Syria's political institutions, which are still dominated by the Baath party-the constitution, as amended in 1973, states that the party must hold a majority of seats in all elected bodies. The most recent party congress, in 2005, called for a commission to be set up to study constitutional reform, but there has been no sign of any action since. An election for the 250-seat, unicameral parliament is scheduled to be held in April.

Mr Assad's confidence in Syria's stability has been borne out to some extent by the tepid response to calls for a "day of rage" in Damascus, the capital, on February 5th. Protesters were vastly outnumbered by the security forces. However, this did not necessarily signify contentment with the regime. During Mr Assad's rule dozens of campaigners for political reform have been jailed, and membership of the Muslim Brotherhood is still subject to a death sentence (although lengthy jail terms are more common). Most Syrians are too young to remember the extreme violence of the Muslim Brotherhood uprising between 1979 and 1982, which culminated in a military onslaught on Hama, a city to the north of Damascus, in February 1982 in which as many as 20,000 people were killed, but fear of what the security forces might do remains a deterrent for anyone contemplating active opposition to the regime.

Damascus incident sparks protests

An altercation between a young man and a traffic policeman led to a large protest demonstration in the Hariqa district of central Damascus, the capital, on February 17th, prompting the interior minister, Said Sammour, to become personally involved in efforts to calm the situation. The incident and the government response reflect the high state of tension across the Middle East in the wake of the overthrow of the presidents of Tunisia and Egypt and the mass protests in Bahrain, Yemen and Libya. The Syrian authorities are likely to have been particularly mindful of the chain of events in Tunisia, in which an incident when one young man, Mohammed Bouazizi, was oppressed and humiliated by police and municipal officials led ultimately to the unseating of the president.

According to an account pieced together by Syria News, a local online news service, on February 20th, the young man, identified as Imad Nasr, had been about to get into his car when a traffic policeman shouted abuse at him ("Get a move on you donkey," according to one witness), which provoked an angry response. The policeman was then reported to have approached the man and hit him, before dragging him to the entrance of a building and continuing with the beating with the help of fellow officers. The incident was recorded on a mobile phone and the video circulated on the Internet, and within a short time several hundred people had gathered in the area shouting angry slogans against the police and affirming that "the Syrian people will not be humiliated". Appeals from the chief of police for this part of Damascus for the crowd to disperse had no effect. However, the crowd did finally agree to disperse when the interior minister arrived with Mr Nasr and announced that there would be a full investigation into the behaviour of the police.

Some accounts of the incident spoke of chants in support of Mr Assad, suggesting that the president's personal popularity provides him with a measure of immunity against the resentment of much of the population at the repressive nature of the Baathist regime, which has maintained emergency detention laws since the party came to power in 1963.

A state security court in Damascus on February 14th sentenced Tal al-Mallouhi, a 19-year-old blogger arrested in 2009, to five years in jail on charges of spying. Her case had attracted much attention from fellow bloggers across the Middle East, and the US State Department criticised the sentence as an abuse of human rights and of basic freedom of expression. The Syrian court did not immediately provide details about the nature of her offence. Her published blogs had focused mainly on the plight of the Palestinians. On February 17th the Syrian Ministry of Foreign Affairs held a press conference at which Bushra Kanafani, the ministry's director of information, gave a detailed exposé of the case against Ms Mallouhi. She said that at the age of 15 Ms Mallouhi had developed a relationship with an unidentified Austrian soldier serving in the UN peacekeeping forces on the Golan Heights. He supposedly persuaded her father to move the family to Cairo, the Egyptian capital, where he set up an Internet café. Ms Kanafani said that Ms Mallouhi was contacted by a US embassy official who was identified by a code name of Jessica and instructed to try to recruit a Syrian diplomat. This diplomat supposedly refused. Ms Kanafani alleged that Jessica and another (male) US embassy official ambushed him on a Cairo street and beat him so badly that he was partially paralysed. Copies of identity cards of the two embassy officials were distributed at the press conference. Ms Mallouhi and her family returned to Damascus, where she was instructed to visit a number of political prisoners, including Fida Hourani and Kamal Bunni. Ms Kanafani was asked what the Syrian government thought of the attention that had been paid to Ms Mallouhi by fellow Egyptian bloggers of the April 6th movement (which initiated the protests that resulted in the overthrow of Hosni Mubarak) since her arrest nearly two years ago. She said that once the bloggers were aware of the full facts they would take a different view of Ms Mallouhi. The US did not give any immediate reaction to Ms Kanafani's claims. The affair will pose a delicate problem for the recently arrived US ambassador, Robert Ford, particularly as the Syrian foreign ministry has made direct allegations against two named US diplomats (identified as the first secretary and second secretary at the US embassy in Cairo).

Mr Assad issued an order at the end of January dismissing Maan al-Shibly as mayor of Aleppo, Syria's second city, and replacing him with Lama Maamar. Mr Shibly's removal came after some 50 officials in the city's municipality had been dismissed by order of the prime minister for various improprieties. The moves to clean up the government of the city had been interpreted by some Syrian media commentators as being aimed at preparing the ground for the forthcoming parliamentary election.

On February 16th Mr Assad signed a new company law, updating legislation that had been passed as recently as 2008. The economy and foreign trade minister, Lamiya Assi, said that the law needed to be revamped in light of issues that had arisen since the revisions were made three years ago. The new law, passed by Legislative Decree 29, incorporates many of the features of the previous law, but adds a number of new elements. One of these, which was highlighted by Ms Assi in an interview with Al Watan, a privately owned daily newspaper, is to allow public-sector companies to change their status to joint-stock companies, subject to the approval of the prime minister and on condition that the company has been profitable in each of the three years preceding such a conversion. This could pave the way for privatisation through listing some of the stock of such companies on the Damascus Securities Exchange. However, the government still adheres to a stated policy of ruling out privatisation for the time being. Ms Assi also said that the new law made a distinction between various forms of closed joint-stock companies, allowing some to be defined as private (implying that shares are not traded) and others as public. She said that under the earlier law there were about 360 family-owned companies that were not properly defined.

Mr Assad passed three decrees on February 17th, with the apparent aim of alleviating the impact of the rising global prices of commodities, which has pushed up year-on-year inflation to above 6% (February 2011, Economic performance), and lowering costs for businesses. Legislative Decree 23 lowers the consumption tax on a range of food items, including cooking oils and fats, coffee and sugar by between 20% and 30%; Decree 70 lowers customs duties on a number of imported foodstuffs; and Legislative Decree 24 cuts the insurance premium required for loans and guarantees, and reduces stamp duties required for licensing companies and signing insurance premiums.

The Ministry of Finance carried out its first issues of government securities of the year on February 14th with an offering of six-month Treasury bills and three-year bonds. This follows the inaugural offering of five tranches of securities at the end of 2010 (January 2011, Economic policy). The ministry has also published a schedule for issuing T-bills and bonds for the whole of 2011. The total amount of these government securities is S£30bn (US$650m), of which S£27bn will be bonds with maturities ranging from one year to five years, and the remainder in bills ranging from three to nine months.

According to the schedule, the ministry's original aim was to raise S£1bn in six-month bills and S£2bn in three-year bonds from the February issuance. Both issues were oversubscribed, each attracting offers of S£2.5bn. For the six-month bills, five banks submitted bids with proposed yields ranging from 0.6% to 3.75%. The ministry decided to allocate S£1bn of bills at 1%. Four offers were made for the three-year tranche, with rates between 1.6% and 4.5%; the ministry clearly judged some of the offers to be too highly priced, as it only issued S£1.7bn worth of bills, with a yield of 2.72%. In the previous issues in December, the rates agreed were 0.6% on the six-month bills and 1.94% for the three-year paper-although in both cases the top rates quoted by the bidding banks were higher. Private banks have tended to quote higher rates than those offered by state-owned banks, and have consequently failed to secure significant allocations from the issues so far. However, private bankers have generally welcomed the government's initiative, as it promises to provide a wider range of tradable instruments in which they can invest their relatively abundant liquidity.

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The Central Bank of Syria has published some fresh macroeconomic data in its most recent Quarterly Bulletin, covering the first half of 2010. (Most of the data in the bulletin are for monetary aggregates for which more recent figures are available in another interim publication issued by the Central Bank.) The main economic indicators in the bulletin include a slight upwards revision of real GDP growth for both 2008 and 2009 to 4.5% (from 4.3% in the previous bulletin) and 6% (from 5.9%), respectively. The variations appear to stem from exchange-rate factors as there has been a small upward adjustment in the figures for nominal GDP in Syrian pounds, whereas the US dollar GDP figures are unchanged. The strong performance in 2010 came despite a significant contraction in trade, reflecting both lower oil prices and the weak global economy. Total exports declined by 29% from S£714bn (US$16bn) in 2008 to S£508bn in 2009; imports fell by 13% to S£651bn from S£750bn. The current account moved from a surplus of S£3.1bn in 2008 to a deficit of S£54.2bn in 2009, equivalent to 2.3% of GDP.

Full-year trade figures for 2010 issued by Turkstat, the Turkish statistics agency, show that Turkish exporters have continued to expand their presence in the Syrian market, benefiting from the strong political relationship between the two governments and from the free-trade agreement, which was signed at the end of 2004. Turkish exports to Syria rose by 30% year on year in 2010 to US$1.85bn, making Syria the seventh-largest market for Turkish goods in the Middle East and North Africa (MENA) region, after Iraq, the UAE, Iran, Egypt, Saudi Arabia, Israel and Libya. In 2010 Turkish exports to the MENA region totalled US$27bn (of which the nine countries in the table below accounted for US$24bn). This was equivalent to almost one-quarter of Turkey's total exports of US$114bn last year. Turkish imports from the region were about US$20bn, out of a total of US$185bn (Turkey imported US$21.6bn from Russia, mainly oil and gas). Syrian exports to Turkey increased too, more than doubling between 2005 and 2010 from US$272m to US$662m.

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Please see graphic below

Please see graphic below

Please see graphic below

Land area

185,180 sq km

Population

20.5m (mid-2008 estimate)

Main provinces

Population in millions, 2006

Damascus (capital) area: 4.01

Aleppo: 4.23

Homs: 1.59

Hama: 1.44

Hassakah: 1.33

Idlib: 1.31

Climate

Subtropical on coast, arid in the centre, cold winters in the highlands

Weather in Damascus

Hottest month, August, 18-37°C (average daily minimum and maximum); coldest month, January, 2-12°C; driest month, August, zero average rainfall; wettest month, January, 43 mm average rainfall

Languages

Arabic, French, some English

Religion

Sunni Muslim (72%); Alawi Muslim (14%); Christian (12%); Shia Muslim and Druze minorities

Measures

Metric system

Currency

Syrian pound (S£) = 100 piastres

Time

GMT plus two hours

Fiscal year

January 1st-December 31st

Public holidays

The dates of Islamic holidays are based on the lunar calendar and are therefore approximate. Mawlid al-Nabi (the birthday of the Prophet, February 26th 2010); Eid al-Fitr (September 11th); Eid al-Adha (Feast of the Sacrifice, November 17th); Islamic New Year (December 7th)

New Year's Day (January 1st); Revolution Day (March 8th); Mother's Day (March 21st); Easter (April 4th); Orthodox Easter (April 5th); Independence Day (April 17th); Labour Day (May 1st); Martyrs' Day (May 6th); October Liberation War (October 6th); Christmas Day (December 25th)

Official name

Syrian Arab Republic

Form of state

Republic

Legal system

Based on the constitution of 1973

Legislature

250-member Majlis al-Shaab (People's Assembly) directly elected for a four-year term

Electoral system

Universal adult suffrage

National elections

Next legislative and presidential elections due in 2011 and 2014 respectively

Head of state

President, elected for a seven-year term. The president appoints the vice-presidents, the prime minister and the Council of Ministers. Bashar al-Assad, the current president, is also the commander-in-chief of the armed forces and the secretary-general of the Baath party

Executive

The prime minister heads the Council of Ministers, a large number of whom are drawn from the ruling Baath party and its partners

Main political parties

The ruling National Progressive Front includes the Arab Socialist Baath Party; Arab Socialist Party; Arab Socialist Unionist Party; Communist parties; Syrian Arab Socialist Union Party; Unionist Socialist Democratic Party; Union Socialist Party

Prime minister: Mohammed Naji al-Otari

Deputy prime minister for economic affairs: Abdullah al-Dardari

Key ministers

Agriculture & agrarian reform: Adel Saffar

Awqaf (Islamic endowments): Mohammed Abdel-Sattar al-Sayed

Communications & technology: Imad Abdel-Ghani Sabbouni

Defence: Ali Habib

Economy & foreign trade: Lamiya Assi

Education: Ali Saad

Electricity: Ahmed Qusay Kayyali

Environment (minister of state): Kawkab al-Sabah al-Dayeh

Expatriate affairs: Joseph Sweid

Finance: Mohammed al-Hussein

Foreign affairs: Walid al-Muallim

Health: Rida Said

Higher education: Ghiath Abdel-Wahab Barakat

Housing & construction: Omar Ghalanji

Industry: Fouad Issa Jony

Information: Mohsen Bilal

Interior: Said Sammour

Irrigation: George Soumi

Justice: Ahmed Hamoud Younis

Labour & social affairs: Diyala al-Hajj Aref

Local government: Tamer al-Hijjeh

Petroleum & mineral resources: Sufyan Allaw

Presidential affairs: Mansour Azzam

Tourism: Saadallah Agha al-Qalah

Transport: Yarob Suleiman Badr

Central Bank governor

Adib al-Mayaleh

State Planning Commission

Amer Lutfi