Traders' woes defy Iraq optimism

Laith Ahmed sells fridges and microwaves in Baghdad for a living. But with sales down by as much as 70 per cent in just two months, he has yet to benefit from the trickle-down of an economy that is expected to grow by 11.1 per cent this year. Traders like him complain they are paying the price for a bloated public sector, persistent corruption and a lack of investment in vital infrastructure amid a deepening political crisis. "Trade has virtually stopped," said Mr Ahmed, who buys his products from neighbouring Dubai and Amman. "No one wants to buy right now. There's an Iraqi saying that capital is a nervous entity and needs security to be confident and flourish." But security is a commodity that is missing in Baghdad, where violence and bombings left 237 dead and 603 wounded last month. It has been more than six months since the withdrawal of US troops, yet the local economy has not shown any sign of improvement. Contrary to the progress made to build up Iraq's oil sector, with output reaching its highest level in 20 years, the country's local economy has slowed ever since opposition parties sought to unseat the prime minister Nouri Al Maliki from power two months ago. Iraq's economy is expected to grow 11.1 per cent this year to about US$144 billion (Dh598.94bn), according to the IMF. The non-oil economy has already showed signs of faltering, with the financial services sector affected the most. Only 70 per cent of banks were able to secure the required 250bn dinar (Dh789.58 million) capital increase by the nation's central bank by Sunday's deadline. The regulator is considering offering a grace period to lenders, said Mudher Salih, the central bank's deputy governor. Mr Ahmed had sought refuge in Damascus in 2006 as Iraq descended into sectarian turmoil. The merchant quickly found opportunity there as the Syrian president Bashar Al Assad's regime loosened its grip on the national economy. But the uprising in March last year caused demand for his home appliances business to plummet. He shifted back to Iraq to capitalise on higher consumer demand as earning power increased and the economy showed signs of revival. But those improvements have failed to materialise for Mr Ahmed. "The market is frozen," he said. "Talk to anyone right now, and ask them if they want to invest or start up a business in Baghdad, and they will say no." Waleed Abdul Jawad, who sells cars in the capital, said sales have declined by as much as 40 per cent in the past month. "Trading activity is really bad right now, there is stagnation in the market and consumer demand is really weak," said Mr Abdul Jawad. "Because of the political wrangling in the government, most Iraqis are weary about what the near-term future is going to look like, especially those with limited income will not spend that much money."