Fears of increased inflation and the devaluation of the purchasing power

Fears of increased inflation and the devaluation of the purchasing power

03/13/2014

Fears of increased inflation and the devaluation of the purchasing powerBAGHDAD / JD / .. expressed a director of the International Bureau for Studies and Economic consulting Tawfiq inhibitor, fear of increased rates of economic inflation in the country to unprecedented levels as a result of the failure of economic policy in the development and the presence of a significant deficiency in the production of goods locally instead of importing them.
The inhibitor in an analytical study prepared for the Agency / JD /: that the level of growth of the Iraqi economy in the country weak due to lack of economic vision and a clear look at the Iraqi economy perspective of long-term, to do the diversity of sources of national income through the activation of the productive sectors to avoid any problems possible economic in the country especially high inflation, which in turn will affect the overall economic situation in the country, pointing out that Iraq imported everything and exported oil only, what makes the source of the gravity of high inflation is very large in the absence of local product.
And: Measuring the general level of inflation is at an average price of goods and services to the country and is not necessarily a rise in all prices because even in times of inflation, severe some prices may be relatively constant or others Prices may fall, when we hear that the report of the inflation rate for the month came in (1%), it means only that the price level increased by 1% this month, which may be changed emergency; If it continues the inflation rate high for a long time) more than 1% a month for several years (here indicates that the inflation has become This was the high prices of all goods and services rise by one and at the same time.
He added that that is happening is expensive for a range of goods and services and that their prices will rise very quickly, unlike the other sect may change slowly, and there is a wide third remain static without change, and that there are benefits and there are prejudiced by this persistent inflation and thus lead to a decline in the value of the ability purchasing power of the citizen and this is now the case with Iraq.
He explained: that with the increase in inflation appear wave intensity of price rises with low and fluctuating value of the currency and disorder in the transaction between the seller and the buyer, and between producer and consumer, and between the creditor and the debtor, in addition to the spread of chaos in the local economy of the state of Her currency with inflation, and therefore people abandoning the currency of their country and resort to owning a currency other country with a better economy, such as the dollar, which leads to damage of the employees in the public and private sector, because they usually have their income constant, even in periods of inflation and price rises, while the income variable such as merchants and businessmen, Vdjulhm usually increases with the wave of inflation, but it In many cases rise by more than the percentage rise in the general level of prices so they are the beneficiaries of this inflation.
He noted in his study to: the savers of financial assets Kaloda├║a long-term banks; often exposed to significant losses because the real value of their savings lose money year after year with higher prices, but from embodies his savings in the form of in-kind such as land and precious metals is the beneficiary of rising prices as such .
He continued: With the continuing rise of the prices people realize that long for the day when the price levels prevailing better than buying in the morning because the prices will go up more and more; hastily “compactness” of any purchase of goods and antiques, precious metals, and the use of foreign currency is more stable in value, which is reflected in the the deterioration of the exchange rate of the local currency if there is inflation.
He stressed: that the greatest damage that affects the balance of payments to the state, and is in the exposure of local industries to stiff competition due to the high price of local product vs. imported product and the most dangerous types of inflation, which may affect any country, and therefore less demand to buy the local product, and this will lead to unemployment and low income level Local, as a result of increased demand for imported goods and reduced demand for domestic goods, where increasing the deficit in the balance of payments, which require face either drain the needs of the country’s gold and foreign currency, or to resort to foreign borrowing, or liquidation of state-owned assets abroad, and this is what is happening in Iraq, but through attrition revenues of natural resources such as oil in operational budgets. / End / / 22

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