Syria’s Economic Woes: Signs of Things to Come?

 
A giant copy of the new 100 Syrian lira note hangs at the entrance of Syria’s Central Bank in Damascus. (Photo: AFP – Joseph Eid)

By: Tarek Abd al-Hayy

Syrians are bracing for hard economic times amid signs of fuel shortages and inflation. Merchants fear that impending Arab League induced sanctions will have a devastating impact on key sectors.
Middle class and poor Syrians are starting to feel an economic squeeze due to the country’s ongoing political crisis. Meanwhile, those who are better off are fighting hard to preserve their standard of living.
The country is beginning to experience shortages in a number of essential items, including diesel fuel. As demand for the fuel used for heating increases with the onset of winter, some Syrians are having to turn to alternative ways to stay warm.
At the moment the outlook is bleak. A general rise in prices of basic foods coupled with stagnation in consumption suggests a major economic crisis could be looming. Many people are afraid to spend whatever money they have left as they wait to see where the political instability will lead.
Rami, 25, works for a company that organizes exhibitions and conferences. He said the company took measures to contain its losses as the crisis escalated and dozens of exhibitions that were expected in Damascus and other Syrian cities were cancelled.

These measures began with shortening working hours, decreasing salaries, freezing unnecessary expenses, and finally ended in mass layoffs with only partial compensation.
Rami said his situation was still better than that of those working in the tourism industry, whom he said were laid off and forced to pledge in writing not to demand any compensation or resort to litigation.

Rami blames what he terms “revolutionicks” for the crisis, arguing that “international sanctions against Syria will not harm the regime as much as they will harm regular people.”

“Does freedom and revolution mean destroying people’s livelihood and displacing low-income families? This revolution has set us many years back,” he said.

On the other hand, 55-year-old lawyer Nada said she tried to get diesel for heating but suppliers told her that it is unavailable.

The Damascus resident said that diesel is being sold for a higher price than the one set by the government, which had taken a decision at the beginning of the protest movement to lower the price of diesel as part of its “reform package.”

The Syrian minister of petroleum Sufian Allaw has taken preventative measures in an attempt to control diesel prices, and the Syrian parliament met in a special session to address the issue.

Nada also pointed to the gradual increase in food prices which have not risen to become unaffordable yet, because most foodstuffs are produced inside Syria.

Rudaina, 29, who works for an airline company pointed out that the tourism industry is suffering the most because of the crisis.

Many airline companies operating in Damascus either cancelled or decreased the number of flights scheduled. The hotel occupancy rate has reached zero, and many Syrians have either cancelled or postponed their trips abroad, especially those taken for pleasure, she said.

Amer who works at a car agency in the Damascus suburbs noticed that sales of new cars have plummeted sharply, despite the government decision to ban imports.

Some businessmen have in fact cut back on imports, which has, to some extent, helped.

The economic crisis was particularly aggravated by the decision taken by some banks to stop financing car purchases. On the other hand, used car sales have improved marginally due to their relatively low prices.

The economic uncertainty affects the merchant class the most, and some have expressed concerns about the impending sanctions by the Arab states.

The sanctions might include a ban on Syrian exports which could lead to an economic disaster, hitting the industrial sector hardest. Merchants also worry that sanctions will undermine Syria’s free trade pact with neighboring countries, such as Iraq, Lebanon, and Jordan – Syria’s main trading partners.

The construction sector in Syria has benefited the most from the political crisis. In the absence of governmental oversight, construction boomed in many areas, especially in slums where multilevel buildings have been constructed in record time.

The construction boom led to an increase in demand for construction materials, and consequently a hike in prices, translating into increased profits for the building sector. As municipalities order demolitions for building violations, people rebuild. As such, cities are experiencing repeated cycles of construction and demolition, bringing a slight but much needed boost to the faltering economy.

This article is an edited translation from the Arabic Edition.

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