Syria’s Finance minister said economic growth in Syria was expected to drop to around one percent because of unrest, and acknowledged EU sanctions could harm the economy.

 

 

Minister Mohammad Jleilati said that economic growth in Syria has slumped to below 2 percent. “Now, it will be around one percent, because of the events … maybe between one to two percent,” Jleilati told reporters on the sidelines of an Arab ministerial meeting in Abu Dhabi when asked about economic growth.

 

He said the Syrian economy grew 5.5 percent in 2010, and expected the gross domestic product to grow by around three percent next year.

 

“The current circumstances, no doubt, have some negative impact on the economy. We hope to overcome it through reforms,” he said.

 

 

Jleilati pointed to economic sanctions as one of the forces expected to put pressure on the economy as they would reduce exports to Europe.

 

 

“Sanctions could impact exports… Trade and industry will be affected because most exports go to Europe,” he told AFP.

 

 

President al-Assad’s government is under increasing political and economic pressure after months of relentless attacks on protests. The U.N. says more than 2,200 people have died in nearly six months of unrest.

 

 

The EU on Friday adopted a ban on crude oil imports, expected to hit hard at Damascus as the EU buys 95 percent of Syria’s oil exports, providing a third of the regime’s hard currency earnings.

 

 

The bloc has not excluded further sanctions.

The EU, which had already frozen the assets of and imposed travel bans on 50 people and eight businesses and organisations, has added four Syrian businessmen accused of bankrolling the regime and three businesses to its list.

 

 

It has also had an arms embargo in place since May 9.

France’s foreign ministry spokesman, Bernard Valero said Tuesday in Paris that tighter economic sanctions could be coming from the European Union – a critical market for Syrian oil and goods. The EU already has imposed several rounds of sanctions, including a ban on the import of Syrian oil.

 

The Syrian Minister, however, downplayed the impact of sanctions on the oil industry.

“Seventy percent of Syria’s oil is refined in Syria. What is left is exported to friendly countries,” he told AFP.

 

Syria produces 387,000 barrels per day of oil and exports around 110,000 bpd.

Syria is expected to easily find new destinations for its oil exports banned from Europe as energy-hungry nations, such as China and India, could jump on the chance to buy the available crude.

 

As for other sectors, Jleilati said that tourism has been negatively impacted by “media exaggeration” claiming that hotel occupancy has dropped, but only to around 40 to 50 percent, thanks to domestic tourism. “Internal tourism is still functioning,” he said.

 

Mohammad Jleilati did not name specific countries for stronger economic bonds, but listed Russia, China and others in Asia as traditionally “friendly” to Syria.

 

Associated Press said that the gathering of finance ministers and other economic envoys in Abu Dhabi also included talks on accelerating aid to Libya after the collapse of Moammar Gadhafi’s regime. The United Arab Emirates has been a leading Arab supporter of Libya’s former rebels, who raised their post-Gadhafi flag at the pan-Arab gathering. Also on hand were international financial groups such as the World Bank and the International Monetary Fund.

 

Jasim al-Mannai, chairman of the Arab Monetary Fund, appealed for donor nations and international agencies to follow through with pledges to Libya and other nations in the region.

 

“We wish these pledges to be delivered as soon as possible,” said al-Mannai without citing a specific country or figures. “There is an urgent need for these countries suffering from the transformations to get the money as soon as possible.”

 

Another goal of the meeting was to seek long-term strategies to tackle unemployment and economic stagnation, which has fueled the Arab uprisings this year. The wealthy Gulf States are poised to sharply boost investment in Libya after allocating huge amounts at home to create jobs and offer generous handouts to quell possible dissent.

 

The latest spending boost came from energy-rich Qatar, which announced wide-ranging salary increases Tuesday that include raises of 60 percent for civil servants and 120 percent for military officers.