Macroeconomic Conditions for Reforming the Syrian Economy

The Syrian economy is currently undertaking a set of measures to introduce market oriented reforms aimed to change the past system of central planning and to adopt socially oriented rules. The envisaged reforms are supposed to bring efficiency of economic activities, to withdraw the state from production decisions and to orientate the enterprises to internal and external competition. Still relying on oil reserves, the Syrian economy needs to develop new activities that will compensate for the rapid depletion of those reserves: the estimations show that in ten years the oil resources will disappear. At the same time, a high pressure from the supply side of the labour market imposes urgent actions to expand the economic activity and consequently create more jobs. The ambitious objective of reforming completely the state institutions, the legal environment and the economic mechanisms needs to consider permanently two elements: the sustainability of economic growth, respectively the macroeconomic stability of the country. High rates of growth are necessary for counterbalancing the decline of oil revenues, while stabilisation is important for the success of overall economic reforms. In this paper we try to analyse the two conditions - sustainable growth, respectively macro-stability - by estimating the potential GDP of the country and comparing it with the effectively produced output. In the second part of the study, we made an evaluation of the degree of economic stabilization, within a regional (Middle East) context