As a result of internal economic policies and external pressure, Syria has low rates of investment, and low levels of industrial and agricultural productivity. Consequently, its GDP growth rate was approximately 1.7% in 2004, according to official government statistics. The two main pillars of the Syrian economy have been agriculture and oil. Agriculture, for instance, accounts for 25% of GDP and employs 17% of the total labor force. The government hopes to attract new investment in the tourism, gas, banking, and insurance sectors to diversify its economy and reduce its dependence on oil and agriculture. The government has begun to institute economic reforms aimed at liberalizing most markets, but reform thus far has been slow and ad hoc. For ideological reasons, privatization of government enterprises is explicitly rejected. Therefore major sectors of the economy including petroleum, ports operation, air transportation, power generation, and water distribution, remain firmly controlled by the government.

The Bashar al-Asad government started its reform efforts by changing the regulatory environment in the financial sector. In 2001, Syria legalized private banking and in 2004, three private banks began operations. A fourth will open its doors in October 2005. Two more private banks are expected to begin operation by the end of 2006. Controls on foreign exchange continue to be one of the biggest impediments to the growth of the banking sector, although Syria has taken gradual steps to loosen those controls. In 2003, the government canceled a law that criminalized private sector use of foreign currencies, and in 2005 it issued legislation that allows licensed private banks to sell foreign currencies to Syrian citizens and to the private sector to finance imports. Syriaís exchange rate is fixed, and the government maintains two official rates- one rate on which the budget and the value of imports, customs, and other official transactions are based, and a second set by the Central Bank on a daily basis that covers all other financial transactions. There is, however, still an active black market for foreign currency.

Given the policies adopted from the 1960s through the late 1980s, which included nationalization of companies and private assets, Syria failed to join an increasingly interconnected global economy. Syria withdrew from the General Agreement on Tariffs and Trade (GATT) in 1951 because of Israel's accession. It is not a member of the WTO, although it submitted a request to begin the accession process in 2001. Syria is developing regional free trade agreements. As of January 1, 2005, the Greater Arab Free Trade Agreement (GAFTA) came into effect and customs duties were eliminated between Syria and all other members of GAFTA. In addition, Syria has signed a free trade agreement with Turkey and initialed an Association Agreement with the EU. Until 2003, Syriaís balance of trade was in surplus. However, 2004 trade statistics indicate that total exports amounted to $4.98 billion against imports of $6.55 billion, and many experts believe that the deficit will grow as Syria opens its markets to foreign goods and its rate of oil production continues to decline. Syriaís main exports include crude oil, refined products, raw cotton, clothing, fruits, and grains. The bulk of Syrian imports are raw materials essential for industry, vehicles, agricultural equipment, and heavy machinery. Earnings from oil exports as well as remittances from Syrian workers are the government's most important sources of foreign exchange.

Syria has produced heavy-grade oil from fields located in the northeast since the late 1960s. In the early 1980s, light-grade, low-sulphur oil was discovered near Dayr az Zawr in eastern Syria. Syriaís rate of oil production has been decreasing steadily, from a peak close to 600,000 barrels per day (bpd) in 1995 down to approximately 450,000 bpd in 2004. Experts generally agree that Syria will become a net importer of petroleum not later than 2012. Syria exported roughly 195,000 bpd in 2004, and oil still accounts for a majority of the country's export income. Syria also produces 245 billion cubic feet per day of natural gas, with estimated reserves around 8.5 trillion cubic feet. While the government has begun to work with international energy companies in the hopes of eventually becoming a gas exporter, all gas currently produced is consumed domestically.

Some basic commodities, such as diesel, continue to be heavily subsidized, and social services are provided for nominal charges. The subsidies are becoming harder to sustain as the population continues to grow faster than GDP. Syria has a population of approximately 18 million people, and official figures place the population growth rate at 2.58%, with 75% of the population under the age of 35 and more than 40% under the age of 15. Approximately 250,000 people enter the labor market every year. According to official statistics, the unemployment rate is 10.8%. However, more accurate independent sources place it over 20%. Government and public sector employees constitute over one quarter of the total labor force and are paid very low salaries and wages. Government officials acknowledge that the economy is not growing at a pace sufficient to create enough new jobs annually to match population growth. The UNDP announced in 2005 that 30% of the Syrian population lives in poverty and 11.4% live below the subsistence level.