Road to Damascus

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From a popular vantage point on Mount Qasiyun.

As one of the world's oldest civilizations, the Syrian Arab Republic has long been a centre of culture, religion and heritage. And yet, despite its rich, cultural traditions, the DNA of the Mediterranean nation is laced with the rogue genes of political unrest along with a tradition of domestic and international military activity.

Caroline Bain, MENA economist at the Economist Intelligence Unit, says the Syrian economy has been boosted in the last two years by the influx of more than one million Iraqi refugees, leading to strong growth in domestic demand, particularly private consumption.

However property investment opportunities in Syria are subdued, even in the hydrocarbons sector, she adds.

"Property prices have been rising rapidly in Damascus, but that was largely the result of increased demand from Iraqi refugees. The property market is relatively safe in that there is little risk of expropriation. But there's a risk that property prices could fall sharply either if the Iraqis return home en masse or international action is taken against Syria that would undermine the prospects for economic growth and inevitably lead to a downturn in the property market."

Syria has also benefited from oil-related regional prosperity with high levels of remittances from Syrians working in the Gulf and some Gulf-based investment.

"But the longer term outlook for growth is not so rosy. Oil production is in terminal decline and is expected to fall sharply in 2008-2909 which will depress export growth as oil still constitutes nearly 40% of total exports. The country's relative political isolation and limited US sanctions have limited growth in productive investment and the impact of this will be felt for some years even if Syria manages to emerge from its political isolation.

Bain believes that politically President Basher al-Assad, has a tight grip on power and this is unlikely to be threatened in the near term, with little prospect of political reform or an improvement in human or civil rights.

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