Syria’s economy depends heavily on its agricultural production. The country has 4.7 million hectares (11.6 million acres) of cultivated land, accounting for 26 percent of its total land area. About one-fifth of the tilled acreage is irrigated, but extensive areas lie unused for lack of water. Irrigation is necessary even in many regions that receive substantial annual rainfall, because most of the rainfall occurs during the winter rather than during the growing season. Much of the acreage under cultivation suffers from soil exhaustion because of insufficient use of fertilizers and failure to rotate crops. The estimated national budget in 1998 included $16.1 billion in domestic revenue and $16.6 billion in expenditure.

Socialism became the official economic policy in 1958. Since then, the trend has been toward socialist transformation and industrialization. In commerce, state control is mainly restricted to foreign-exchange operations. Small private businesses and cooperatives are still in operation, and the retail trade is still part of the private sector, despite competition from consumer cooperatives in the large cities. The government controls the most vital sectors of the country's economy and regulates private business. The state operates the oil refineries, the large electricity plants, the railways, and various manufacturing plants.

Syria's predominantly statist economy is on a shaky footing because of Damascus's failure to implement extensive economic reform. The dominant agricultural sector remains underdeveloped, with roughly 80% of agricultural land still dependent on rain-fed sources. Although Syria has sufficient water supplies in the aggregate at normal levels of precipitation, the great distance between major water supplies and population centers poses serious distribution problems. The water problem is exacerbated by rapid population growth, industrial expansion, and increased water pollution. Private investment is critical to the modernization of the agricultural, energy, and export sectors. Oil production is leveling off, and the efforts of the nonoil sector to penetrate international markets have fallen short. Syria's inadequate infrastructure, outmoded technological base, and weak educational system make it vulnerable to future shocks and hamper competition with neighbors such as Jordan and Israel. The government recognizes the need to open the economy to additional domestic and foreign investment.