Posted on September 10, 2011

The unrest in Syria is actually harming the country's economy. The International Institute of Finance has estimated that Syria's economy will shrink by 3 percent this year, a steep fall from 5 percent growth in 2010, in the wake of the unrest.

Syria's public debt stands at about 74 percent of GDP, second only to Lebanon, according to figures from London-based consultancy, Capital Economics. Meanwhile, tourism, which last year accounted for roughly 12 percent of GDP and brought in $8 billion in had currency, has fallen sharply.

Meanwhile, investors are concerned about the turmoil in the country. According to Theodore Roosevelt IV, managing director of investment banking at Barclay's capital, what is happening in Syria now is disturbing for investors.

FDI in general and Gulf investment in real estate after oil and gas are considered major sources needed to boost the Syrian economy. Actually, political unrest has blocked three major Gulf investment projects in Syria.

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The state-owned Qatar Diar real estate company has halted a central Damascus project with a planned built-up area of 2.5 million square meters. A smaller project that the company had started on the Mediterranean seafront near the city of Latakia, one of the protest hotspots, is now also at a standstill.

Qatar has been one of the few large investors in Syria in sectors other than oil, along with the United Arab Emirates. Foreign companies, such as Total, still operate in Syria's small oil sector.

Drake and Scull, an international engineering firm based in the United Arab Emirates, recently halted work on a $28 million subcontract in Syria's central city of Homs. Another Qatari firm, Qatar Electricity & Water Co has shelved plans to build two power plants in Syria. According to sources in Damascus, most of the projects that have taken off the ground are continuing, but the ones that were planned have been effectively scrapped. The three biggest were Diar's development, a $500 million project by Emaar Properties in Yafour district outside Damascus, and a $1 billion project next door by Majid Al-Futtaim Group that had been delayed before the unrest.

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