IRAQ'S ECONOMY ON THE EVE OF THE ELECTION: ARE YOU

UNCLAS SECTION 01 OF 02 BAGHDAD 002660 AIDAC SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EAID EFIN ETRD ECON PGOV PREL IZ SUBJECT: IRAQ'S ECONOMY ON THE EVE OF THE ELECTION: ARE YOU BETTER OFF NOW THAN FOUR YEARS AGO? REF: A. BAGHDAD 2301 ¶B. BAGHDAD 2514 This cable is sensitive but unclassified; please protect accordingly. ¶1. (SBU) On the eve of the election season in Iraq, we do not expect any major party or coalition to campaign on a record of economic success. Security and stability continue to be the primary focus, and are essential for economic success. However, it is worthwhile to compare today,s Iraqi economy with the economy that existed before the formation of Iraq's first democratically elected government in May 2006. ¶2. (SBU) From a strictly economic point view, looking at the macroeconomic figures below, an average Iraqi might answer "yes"to the question: "Are you better off now than you were four years ago?" A general improvement in the security situation has contributed to a fall in inflation (ref A). Private bank lending has surpassed private bank capital (ref B),meaning more Iraqi consumers and businesses are able to borrow to achieve their goals. The benefits of technology are spreading as power generation is improving and cell phone and internet usage is growing. Finally, total trade and imports grew considerably, reflecting that more foreign goods are in the market than four years ago. (NOTE: August 2009 is the most recent point for which we have corresponding data. Projected data are noted with a (P). END NOTE.) ¶3. (U) Indicator December 2005 August 2009 -------------- -------------- Headline inflation, 31.6% -0.3% year-over-year (y-o-y) Consumer Price Index Core inflation 28.6% 10.8% Civilian casualties 12,515 5,336 (cumulative total for 12 months period ending December 2005 and August 2009) Dinar/Dollar exchange 1474 1170 rate, as of year end 2005 and month end Aug 2009 MinFinance T-Bill rates, 8.9% 5.8% as of year end 2005 and month end Aug 2009 CBI Policy Rate, as of 7% 7% year end 2005 and month end August 2009 Bank loans to customers $1.16 $4.48 in billions USD Bank customer deposits, $9.39 $35.58 in billions USD Imports of goods and $24.9 $38.9 (P) services, in billions USD Exports of goods and $23.5 $36.2 (P) services, in billions USD Nominal GDP, $31.4 $68.6 (P) in billions USD GDP Growth -0.7% 6.9% (P) Oil GDP Growth -8.1% 8.7% (P) Crude Oil Production, 1.9 2.5 (P) millions barrels per day Crude Oil Exports, 1.4 2.15 (P) millions barrels per day Gross Official Reserves, $12 $42 in billlions USD BAGHDAD 00002660 002 OF 002 Total Gross External Debt, $351.6 $131.7 in billions USD Current Account, $1.9 $-4.2 in billions USD GOI Budget, billions USD $23.844 $58.615 GOI Expenditures, $17.834 $16.634 billions USD Avg. Daily Megawatt Hours 91,725 135,890 Cell phone subscribers, 3.8 19.0 in millions Internet subscribers 147,076 820,000 (e) Unemployment 25% - 40% 12% - 30% For sources and additional info, please contact the Finance and Development Team of the Embassy Baghdad Economic Section: chowpl@state.sgov.gov / woolfordmk@state.sgov.gov / grauerkk@state.sgov.gov / werbergsx@state.sgov.gov. HILL