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Iraq’s economy battered by Islamic State war, low oil prices

Iraq’s economy battered by Islamic State war, low oil prices

In business since the 1960s, Karim al-Aboudi’s family has seen Iraq’s economy boom with oil wealth and bust through wars and the 2003 U.S.-led invasion, but today marks the worst downturn he’s seen in decades.

Forced to fire 65 percent of his staff and close two of his six aluminum and glass factories, al-Aboudi’s troubles mirror those facing business owners across Iraq. As the country battles the Islamic State group on the ground, it faces massive budget deficits brought on by the lowest global oil prices in six and a half years.

And while austerity cuts have helped Iraq fund its military effort against the extremists, it has slowed businesses like al-Aboudi’s and construction firms that rely on government contracts.

Taking a deep puff of a cigarette, 65-year-old al-Aboudi said he and others don’t see it getting much better soon: “The manufacturers and merchants are now only drinking tea and reading newspapers.”

Since early 2014, Iraq has suffered a serious economic decline after the Shiite-led government in Baghdad started losing territory to the Sunni militants of the Islamic State group. Low oil prices exacerbated the decline, wreaking havoc on Iraq’s national budget, of which oil revenue makes nearly 95 percent.

Source: Iraq’s economy battered by Islamic State war, low oil prices