Better growth expected in 2012

Kamal Hamdan: Informal trade,
other indicators worsened this year

The economy is expected to see slightly improved performance this year due to increasing capital inflows and remittances from the Gulf countries, according to the UN’s Economic and Social Commission for Western Asia (ESCWA). The ESCWA projected 2.5 percent GDP growth for 2012, up from two percent growth last year.

Kamal Hamdan, managing director at the Consultation and Research Institute, said several indicators have worsened this year affected by the ongoing crisis in Syria. “Most of our exports which go to their destination markets through Syria have been hit as the high prices of transport made them less competitive,” he said.

Hamdan also said that the size of cross-border informal trade has also gone down. The exchange of goods and tourists across the porous land border has significantly come down since the start of the turmoil in Syria.

FDI dropped from $4.5 billion in 2010 to $3 billion in 2011. The ESCWA said the country will receive less FDI in 2012 due to uncertainty. According to Hamdan, FDI, remittances, and cash transfers from abroad are expected to decline this year, in line with the recession in the countries of source.

The Ministry of Finance had estimated real growth in 2011 at five percent. Hamdan said the absence of in-depth surveys causes such discrepancies in the estimates. He said there are no statistical surveys targeting the sectors, and even if there are surveys, there is often a discrepancy in the definitions and parameters. “It is hard to say which of the two estimates is more accurate, but based on the facts I’ve read, I believe GDP growth was something between three and 3.5 percent in 2011,” said Hamdan.

The ESCWA said the current account deficit widened last year due to the weakening financial environment and a drop in capital inflows. It said the tourism industry was hit by unrest in Syria, and it expected the sector to continue to be affected by the ongoing crisis.

“My impression is that this year will see a steeper slowdown than the year before,” Hamdan said.

Reported by Hanadi Chami