Gulf News: Iraqi economy is in danger of collapsing to its dependence on oil revenues

Gulf News: Iraqi economy is in danger of collapsing to its dependence on oil revenues

Created on Tuesday, 26 November 2 / نوفمبر 2013 3:56 p.m.

Abu Dhabi / Agencies

Iraq continues to expand its oil resources, but the diversification of the economy by about bigger is necessary, according to an analysis of what he saw Qatar National Bank QNB . The analysis, published by the newspaper Gulf News UAE’s English-speaking, that in the wake of the Iraq war, the expansion of oil production in Iraq quickly, what produced a rise in the gross domestic product of $ 1750 in 2005 to more than 6300 dollars in the year 2012 in spite of social context is difficult.

The bank said it “nevertheless, continue the Iraqi economy suffering from weak builders, such as a small non-oil sector, and the involvement of the dominant sector in all areas of the economy and the business environment is backward.” Because the Iraqi economy led primarily developments in the oil sector, the growth is expected to remain strong in the short term.

However, there are risks to the macroeconomic outlook, such as the occurrence of more social instability and weak policy implementation. These risks can be translated into declining oil revenues, what Idhwr financial position and the possibility of rising levels of inflation. The macroeconomic performance of the Iraqi over the past few years seemed intact on the back of oil production activated. In the year 2012, production averaged 3.1 million barrels per day, the highest level in more than 30 years.

The acceleration of real GDP growth rate averaged 6.4 percent, reflecting “the increasing oil production and higher oil prices.”

However, the high economic growth based on the expansion of the oil sector may not be enough to ensure the continued prosperity. The lack of diversification of the economy makes it even this time of growth of the Iraqi economy sensitive to fluctuations in world oil prices and could undermine macroeconomic stability. Eight diversification of the economy could pose a challenge to the Iraqi government in creating jobs and enhance income-generating opportunities for both, for the majority of the population.

And engaged the International Monetary Fund to support the economic reform program, the government medium-term, and thus help the country to improve the financial sustainability and reduce their vulnerability to sudden declines in oil revenues. Iraq still faces the challenges of development in spite of the rise that has been achieved recently in economic growth. The fact is that there is a need to rebuild the infrastructure and institutions, and the difficulty of the task increased the possibility of social instability. As well as this, that the impact of war and economic sanctions, all contributed to the deterioration of social indicators in Iraq the past few years.

For example, the infant mortality rate is among the worst in the Middle East and North Africa region. Moreover, decreased enrollment over the past decade as a result of the low quality of education and the low return to education. Between 2007 and 2012, consumption of the media world, which account for 40% of the population in terms of income grew by 1.1 percent only a year, which is lower than the average growth of consumption of the total population (1.8 percent), which indicates that the income distribution has become more skewed .

The group expects the Qatar National Bank, QNB , to increase the growth of real GDP in Iraq in the future to 6.3 percent in 2014, with increased oil production, along with a rapid expansion in government services, trade and construction.

In addition to this, due to investments to grow strongly in several large oil fields, while strengthening the momentum of infrastructure development. However, the challenges of social context and external shocks and the weakness of the economic structure represents a risk to the short-term prospects for the economy in Iraq. The bank said that “over the medium term, the main challenge for the Iraqi economy remains valid generally develop its sector non-oil, which can provide a resource to diversify the economy, and rising living standards, and better social conditions for his people.”

uragency.net