The government's financial advisor to / Nina /: a large stagnation of monetary inflation will hit the economy of Iraq / Expanded

Monday 01 November 2021 16:30
 
Baghdad / NINA / - The government's financial advisor, Mazhar Muhammad Salih, warned against entering the Iraqi economy into a phase of hyperinflation as a result of the challenges facing the country's monetary policy.

Muhammad Salih said in a statement to the National Iraqi News Agency / NINA /: Monetary policy in Iraq during the years 2020-2021 faced challenges and opportunities that raised two main contradictions in achieving the goals of macroeconomic stability. It was preceded by a price deflation, “and the second: the return of oil prices to improvement within the cycle of oil assets, from an average annual price of $38 a barrel to an annual average of $70, upwards in 2021 compared to 2020.”

He pointed out that "the contradiction here is the rise in foreign reserves by 23%, with inflation creeping in, lest it approach 10%, with unemployment levels stabilizing slightly and slowly, at less than 23%, especially among the young labor force, to leave us with little economic growth that does not exceed (positive 1%) in the gross domestic product, which means that the country has moved to the stage of (inflationary stagnation), especially after decreasing the exchange rate of the Iraqi dinar at once less than a year ago, which was proportional to the decline in foreign reserves of the Central Bank of Iraq.

He added: If unemployment, inflation and growth continue with this highly contradictory trilogy, monetary policy may take an opposite intervention path with an effective stability policy in which it will undertake to combat inflationary expectations through the use of the nominal stabilizer for the exchange rate and towards improving the purchasing power of the Iraqi dinar and facing potentially positive transitional inflation due to inflationary activity The global demand for energy and its effects that are being stimulated by the transition of the global energy demand function with the opening of the global economy from its isolation gradually. / End 8

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