I posted this on another website so some of you may have already read it. Just an observation I have been thinking about.
As we can see from past articles inflation is still a problem in Iraq but not an uncontrollable one. With the loss of a lot of the government subsidies inflation is going to be around for awhile. For the time being this is good for us because it will continue to foster the desire to pull money out of circulation, thus raising the value of the Dinar. With the different programs in the 2007 budget, which includes a $91 handout, for the first and last three months of the year, to each person deemed a hardship case and a (if I remember correctly) 50% increase in pay for the government employees, the economy will get a strong boost. The government is the largest employer in the country. It seems the GOI is really trying to stimulate the Iraqi economy.
There was another article that the demand for the dollar is also growing, this means only one thing. With the general populace hording the Dinar and the CBI continuing to pull Dinars out of circulation, the demand for the dollar is up because the Iraqi economy is growing and imports are increasing. Purchasing power is slowly increasing and almost all imports are in dollars. If demand for the dollar is up then imports are also up. We know from the past articles that the economy is growing at about 12 to 15 percent a year, this demand for the dollar helps back that supposition of a growing importing economy. If they can keep the inflation from getting out of control this is a great formula for a rapidly growing economy. Remember in another article they plan on getting the 22 factories around Baghdad up and running by the end of the year. The people surveying the factories were surprised at the good condition the factories were in. This alone is going to employee 22 thousand people.
With the neighboring countries reaping a good portion of the benefits of the growing import business in Iraq this will help curb the influx of violence. We are already witnessing this between Turkey and the Kurds. Syria and Iraq want to soon reopen an already existing oil pipeline to the Mediterranean. You can be sure Syria won’t let that revenue generator get bombed and hopefully we will see the oil pipeline to Turkey not bombed as much now, since Syria has theirs too. I think we are seeing the stage being set to a witnessing of an economic boom in that part of the world. The revaluation is coming, maybe not as fast as I would like it, but it is only a matter of time. I don’t think that time is more than 2 years out at the very most.