Economic stagnation spoils the joy of Iraqis as Eid al-Adha approaches

BAGHDAD -

Iraqi families used to go to local markets before the days of Eid al-Adha to buy clothes and prepare food for the manufacture of sweets and others. However, the appearances of shopping and roaming in the markets declined before Eid this year, and the markets became sad looking for their customers.

There are many reasons that hit the joints of the local markets affected by the crises that affected the Iraqi economy as a whole, crises that made this holiday not like the previous ones, as Iraqis suffer from a chronic decline in purchasing power.

Al-Mayahi: No customer enters my store for several days (Al-Jazeera)

slumber

Hassan Al-Mayahi, owner of a women's clothing store in the commercial district of New Baghdad, southeast of the capital, says that "the state of the market since the beginning of this year has been in complete sleep," noting that "there is a great weakness in families shopping for Eid clothes, unlike what happened during last year's holidays, which It witnessed a great turnout, especially in the few days before Eid al-Fitr and Eid al-Adha."

Al-Mayahi revealed in his speech to Al-Jazeera Net that he had suffered a great loss due to the failure to sell for consecutive days, and said, "Sometimes no customer enters my store."

Al-Mayahi links the situation of the Iraqi market with the political situation, especially that the country is now in a cycle of political rivalry after the recent parliamentary elections, a situation to which is added the high prices of goods from the main source, which pushes retail store owners to raise selling prices to citizens.

Al-Quraishi accuses some traders of manipulating food prices (Al-Jazeera)

The situation is not different with the owners of food stores in Baghdad, as they face great financial damage with the decline in the demand for their stores in the period leading up to Eid, unlike the situation in the past years.

Zain Al-Abidin Al-Quraishi, owner of a food store in Al-Mashtal area (south of Baghdad), says that "food prices have witnessed a significant increase during the past two years."

Al-Quraishi accused some importing traders of manipulating prices and making a big profit at the expense of citizens, and said that "some importing traders raced to increase food prices, and we had no choice but to increase prices after wholesalers raised their prices by up to 60%."

Sumaisem: The rise in food prices as a result of the Corona pandemic and the Ukraine war moved inflation to Iraq (Al-Jazeera)

stagflation

The economic expert, Dr. Salam Sumaisem, reveals "the pillars of stagflation that hits the Iraqi economy at the present time," and she told Al Jazeera Net that "the monetary policy that was followed by reducing the price of the Iraqi dinar against the US dollar in 2020 led to an inflationary wave that hit the national economy, which is an exposed economy that depends import only in a way that makes it vulnerable to the international wave of inflation.”

Sumaisem believes that "the economic events that the world witnessed and the rise in food prices after the Corona pandemic, were the reason for the emergence of a new price movement that contributed to the transmission of inflation to Iraq. The Iraqi economy is not flexible and does not have a productive apparatus such as agriculture and industry, and trade policy lacks protectionist controls for the local product, in addition The spread of financial and administrative corruption in the public sector departments, which increased the size of unemployment, and thus all the pillars of stagflation in Iraq were completed.

Economic researcher Rami Jawad expects inflation to rise until the end of this year (Al Jazeera)

high inflation

Iraq is witnessing high inflation rates whose factors and causes are determined by economic researcher Rami Mohsen Jawad, who said that the data of the Iraqi Ministry of Planning recorded a slight increase in the monthly inflation rate for last May, at 0.2%;

However, it recorded an annual inflation rate of 5.4% compared to the same month in 2021.

Jawad points out that "the monetary issuance of the Central Bank of Iraq - which has risen by 60% since the beginning of 2020 and recorded 83.3 trillion dinars (1 dollar equals 1460 dinars) until May 2022 at a monthly increase rate of up to 2% - is one of the most dangerous causes of inflation." .

Jawad added that "this rise in cash issuance (printing money) comes as a result of the increase in the internal borrowing of the Ministry of Finance and the increase in its sales of dollars to the Central Bank to cover the operating expenses of the state and its inability to meet its need of the dinar through mechanisms that limit dependence on dollar oil revenues, and that" the policy of The central bank - especially with regard to real estate loans and low-interest project loans - contributes significantly to the rise in inflation rates."

With the continued rise in global inflation directly related to the rise in crude oil prices and the weakness of supply chains, the economic researcher expects inflation levels to rise by the end of this year and reach the limits of 7%.

Jawad expresses his surprise at the silence of the Central Bank and the Ministry of Finance and their failure to take any remedial measures to limit the rise in inflation, such as raising interest rates on loans or selling bonds to the public to withdraw the monetary mass or expanding the tax base that suffers from weakness in its collection procedures that do not exceed 12% of total activities and incomes. taxable cash.

He concluded that "this rise will reflect negatively and directly affect the vulnerable and middle-income groups of Iraqi society."