Bloodshed undercuts Iraq economy

Increasing bloodshed and daily sectarian violence in Iraq has lead to banks cutting their GDP growth forecasts for the torn country.

Bloodshed undercuts Iraq economy

World Bulletin / News Desk

It has been a decade since the US invasion of Iraq ended the era of Saddam Hussein, but the power vacuum created by the ousting of Iraq’s former dictator still remains unfilled despite the election of a government and the withdrawal of US forces.

On the contrary, violence this year has peaked to its worst since 2008, with around 5,000 deaths reported from the daily tit-for-tat sectarian violence between Sunnis and Shiites, which has been enflamed by the Syria civil war.

Barcley’s PLC has already cut Iraq’s growth forecast from 10.1% to 9.1% this year, and from 10.2% to 9.3% for next year.

“It’s striking how different the outlook for Iraq is today than what it was as late as June, when the question was who would make room for growing Iraqi production in the marketplace,” Daniel Yergin, the vice chairman of Englewood, a Colorado-based research company, told Bloomberg in a phone interview “Everyone is bringing down their forecast in light of what’s actually happening on the ground.”

He further added, “it’s hard for companies to operate in Iraq, the cost of operating there is higher because the cost of assuring security adds significantly to the overall costs.”

Iraq’s daily oil production has also reduced from 3.9 million barrels a day to 3.6 million. This has effected the economy drastically considering 99% of Iraq’s export earnings comes from crude oil, making up 90% of the budget revenue, according to the Economist Intelligence Unit. This can be easily disrupted by iminent disputes regarding energy reserves in the northern region of Kurdistan.

Harith Hasan, a political scientist, also told Bloomberg that despite appearing as one of the fastest economically developing countries in the world, the statistics had very little to do with real developments on the ground.

Demands for Iraqi oil may decrease in 2014, particularly if a deal is struck between the US and Iran, reducing the sanctions on Iranian oil. This will give Iraq more of a reason to worry.  

  

Last Mod: 24 Ekim 2013, 15:02
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