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Sun 5 Aug 2012 10:53 AM

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Syria's economy to contract 14% as revolt against Assad continues

Report says foreign currency reserves down to just $10.8bn

Syria's economy to contract 14% as revolt against Assad continues
The Institute of International Finance said Syrias economy will shrink by 14 percent this year as the revolt against President Bashar Al-Assad takes its toll on the country.

Syria's economy will shrink by 14 percent this year from a contraction of 6 percent in 2011 the 17 month rebellion against President Bashar Al-Assad takes its toll on the country's industries and investment falls, while sanctions limit export capacity, the Institute of International Finance said. 

Tourism receipts have plunged from 11 percent of gross domestic product in 2010 to 4 percent last year when the uprising against Assad started, the IIF said. 

Tourism receipts are forecast to fall to 0.6 percent of GDP this year while foreign direct investment have plummeted from $1.5bn in 2010 to $0.6bn last year and is projected to drop to $0.1bn in 2012.

The country's fiscal deficit, finance most by domestic banks, is forecast to widen 14 percent of GDP in 2012 compared with 8 percent last year  as the government increases spending and tax revenue declines and oil receipts decrease, the IIF said.

Syria's oil production output are forecast to decline to 100,000 barrels per day in 2012 from 130,000 barrels a day last year.

Syria's foreign currency reserves sank to $10.8bn as a result of $5bn in capital flight and a drop in foreign exchange receipts, from a high of $19.5bn in 2010, the IIF said. The current foreign currency reserves are equivalent to 4.4 months of imports.

The country's foreign exchange reserves are forecast to nose-dive to $1.1bn at the end of this year and the continued turmoil in the country are likely to deplete Syria's official reserves by the end of 2013.

The total amount of money that has left the country since the uprising against Assad began in March 2011 and July 2012 is $10.5bn or 21 percent of GDP.

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