Iraq's economy shrank by 11.2 per cent last year – the country's worst performance since 2003 – as it dealt with the twin shocks of low oil prices and the Covid-19 pandemic, according to the Institute of International Finance.
These two factors, combined with ongoing political instability in the country, led to Iraq's budget deficit swelling to 15.6 per cent of gross domestic product in 2020 and a sharp decline in its official reserves, a report from the institute's chief Mena economist Garbis Iradian said.
However, a modest oil price recovery and the recent devaluation of the Iraqi dinar could put the country finances on a more sustainable footing, it added.
“We expect the fiscal deficit to narrow from 16 per cent of GDP in 2020 to 8 per cent in 2021 if oil prices average $47 per barrel and under 1 per cent if oil prices average $57 per barrel in 2021,” the IIF report said. “The devaluation alone would improve the fiscal balance by 5 per cent of GDP due to much higher oil revenues in Iraqi dinars.”
Iraq, a major oil producer, devalued its currency by about 23 per cent against the US dollar on December 20. The Central Bank of Iraq set the exchange rate at 1,450 dinars per dollar, from a peg of 1,182 dinars, for sales to the finance ministry. The dinar is being sold to the public at 1,470 and to other banks at 1,460.
As the economy improves, spending is also projected to increase 10 per cent in 2021, "driven by the recovery in capital spending, which was cut by half in 2020,” the IIF report said.
More public investment is needed to repair war-damaged infrastructure and enhance the provision of basic public services, including electricity, the institute said.
Current spending also needs to be reoriented to targeted sectors such as health, and less on wages and pensions, which account for 65 per cent of total expenditure, according to the report.
“In the context of prolonged low oil prices, if spending on wages and pensions remains elevated then the fiscal deficit will remain large and the government will not be able to allocate additional needed resources for spending on infrastructure and health,” it said.
Oil revenues play a major role in Iraq’s economy, accounting for 65 per cent of GDP and 95 per cent of total exports. Iraq is Opec's second-largest producer.
Oil prices have recovered in the last few weeks due to production curbs by Opec and its allies. Saudi Arabia also announced a surprise unilateral one million barrels per day production cut in February and March to support oil markets.
The Washington-based institute expects Iraq's real oil GDP to grow at 1.6 per cent in 2021 due to higher oil exports. Non-oil GDP will grow 3.1 per cent on the back of a recovery in public investment, it said.
Iraq’s economy is dominated by the public sector which encompasses more than 160 "inefficient" state-owned enterprises and employs a large portion of the workforce outside the oil industry.
“Widespread corruption, a weak regulatory framework, and a poor business environment continue to inhibit private sector development, job creation, and higher FDI inflows,” it said.
Iraq’s equally unfavourable ranking in the World Bank’s Doing Business report (171st out of 190 countries) is also an issue and reflects "large difficulties for businesses to obtain credit, access electricity, trade, and protect their rights in court," it said.
Streamlining business regulations and affirming investor rights would help to improve its ranking, the institute said.
In 2020, coronavirus cases and deaths in Iraq were among the highest in the Middle East and North Africa region, as authorities were unable to enforce social distancing or the wearing of masks. As of Saturday, Iraq has recorded 12,984 deaths from the pandemic and more than 612,000 cases, according to Worldometer.
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It’ll be summer in the city as car show tries to move with the times
If 2008 was the year that rocked Detroit, 2019 will be when Motor City gives its annual car extravaganza a revamp that aims to move with the times.
A major change is that this week's North American International Auto Show will be the last to be held in January, after which the event will switch to June.
The new date, organisers said, will allow exhibitors to move vehicles and activities outside the Cobo Center's halls and into other city venues, unencumbered by cold January weather, exemplified this week by snow and ice.
In a market in which trends can easily be outpaced beyond one event, the need to do so was probably exacerbated by the decision of Germany's big three carmakers – BMW, Mercedes-Benz and Audi – to skip the auto show this year.
The show has long allowed car enthusiasts to sit behind the wheel of the latest models at the start of the calendar year but a more fluid car market in an online world has made sales less seasonal.
Similarly, everyday technology seems to be catching up on those whose job it is to get behind microphones and try and tempt the visiting public into making a purchase.
Although sparkly announcers clasp iPads and outline the technical gadgetry hidden beneath bonnets, people's obsession with their own smartphones often appeared to offer a more tempting distraction.
“It's maddening,” said one such worker at Nissan's stand.
The absence of some pizzazz, as well as top marques, was also noted by patrons.
“It looks like there are a few less cars this year,” one annual attendee said of this year's exhibitors.
“I can't help but think it's easier to stay at home than to brave the snow and come here.”
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
FIGHT%20CARD
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Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
Background: Chemical Weapons
Ipaf in numbers
Established: 2008
Prize money: $50,000 (Dh183,650) for winners and $10,000 for those on the shortlist.
Winning novels: 13
Shortlisted novels: 66
Longlisted novels: 111
Total number of novels submitted: 1,780
Novels translated internationally: 66
MATCH INFO
Borussia Dortmund 0
Bayern Munich 1 (Kimmich 43')
Man of the match: Joshua Kimmich (Bayern Munich)
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
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Motori Profile
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How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Tips for SMEs to cope
- Adapt your business model. Make changes that are future-proof to the new normal
- Make sure you have an online presence
- Open communication with suppliers, especially if they are international. Look for local suppliers to avoid delivery delays
- Open communication with customers to see how they are coping and be flexible about extending terms, etc
Courtesy: Craig Moore, founder and CEO of Beehive, which provides term finance and working capital finance to SMEs. Only SMEs that have been trading for two years are eligible for funding from Beehive.
The figures behind the event
1) More than 300 in-house cleaning crew
2) 165 staff assigned to sanitise public areas throughout the show
3) 1,000 social distancing stickers
4) 809 hand sanitiser dispensers placed throughout the venue
UAE currency: the story behind the money in your pockets
THE BIO
Ms Davison came to Dubai from Kerala after her marriage in 1996 when she was 21-years-old
Since 2001, Ms Davison has worked at many affordable schools such as Our Own English High School in Sharjah, and The Apple International School and Amled School in Dubai
Favourite Book: The Alchemist
Favourite quote: Failing to prepare is preparing to fail
Favourite place to Travel to: Vienna
Favourite cuisine: Italian food
Favourite Movie : Scent of a Woman
