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Iraq, Economy Stalling, May Be Broke by Next Year

Drop in oil price has gutted nation's income

By Katherine Thompson,  Newser Staff

Posted May 11, 2009 12:46 PM CDT
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(Newser) – Some people thought Iraq wouldn't be affected by the worldwide economic downturn, says an Iraqi economist. "Those people were stupid." At the very least, they were wrong: Sales of consumer goods are in the basement, along with real estate, and the unemployment rate hovers around 25%. Surpluses from last year's soaring oil prices have cushioned the blow, but by next year the government will "basically run out of money," says a US official.

Add to the collapse in the price of oil—tough on a country that gets 90% of its income from fossil fuels—the end of most US reconstruction aid and the continuing scarcity of foreign investors, spooked by the new round of violence this spring. The outlook for the years to come is scary, and that in turn could undermine stability. "We cannot talk about stable security without economic progress," says PM Nouri al-Maliki.

Iraqi stock traders look at the sales screen at the Iraq Stock Exchange in Baghdad, Sunday, April 19, 2009.
Iraqi stock traders look at the sales screen at the Iraq Stock Exchange in Baghdad, Sunday, April 19, 2009.   (AP Photo/Hadi Mizban)
Iraqi women walk past new cars at automobile lot in Baghdad, Iraq Wednesday, April 1, 2009. The economic downturn has finally hit formerly booming industries in Iraq.
Iraqi women walk past new cars at automobile lot in Baghdad, Iraq Wednesday, April 1, 2009. The economic downturn has finally hit formerly booming industries in Iraq.   (AP Photo/Khalid Mohammed)
Iraqi youths inspect generators for sale in central Baghdad, Iraq, Saturday, March 31, 2007. Other consumer goods may be stagnating on shelves, but people still need to supply their own electricity.
Iraqi youths inspect generators for sale in central Baghdad, Iraq, Saturday, March 31, 2007. Other consumer goods may be stagnating on shelves, but people still need to supply their own electricity.   (AP Photo/Samir Mizban)
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