Syrian economy set to shrink 20 pct in 2012

BEIRUT - Reuters

Syrians stand in rubble of a building destroyed due to fighting in Aleppo. AP photo

War-ravaged Syria’s economy will shrink by a fifth in 2012 and all its foreign reserves could be spent by the end of next year, a global finance industry association said yesterday.

Since a revolt that has since descended into civil war started in March 2011, inflation has risen to 40 percent and the Syrian pound’s official exchange rate against the dollar fallen by 51 percent, the Institute for International Finance (IIF) said.

As well as financing the war, President Bashar al-Assad’s government has spent billions of dollars of hard currency reserves on wages, fuel subsidies and propping up the pound, bankers in Damascus say.

The Washington-based IIF said the reserves could be depleted by the end of 2013.

Opposition activists estimate some 40,000 people have been killed in Syria as fighting between rebels and the army has raged in almost every city and has now reached the outskirts of the capital.
International measures to pressure al-Assad to step down have also affected the economy.