QNB: Iraq’s real GDP growth to rise to 6.3% in 2014

Updated 16 November 2013

QNB: Iraq’s real GDP growth to rise to 6.3% in 2014

Iraq continues to expand its oil resources, but further economic diversification is needed, according to QNB Group. Following the Iraq war, oil production has expanded rapidly, resulting in a rise in per capita GDP from $1,790 in 2005 to over $6,300 in 2012 despite a difficult social context. However, Iraq’s economy continues to experience structural weaknesses, such as a small nonoil sector, a dominant public involvement in all areas of the economy and an underdeveloped business environment.
According to QNB Group, with Iraq’s economy continuing to be primarily driven by developments in the oil sector, economic growth is expected to remain strong in the short-term. However, there are risks to the macroeconomic outlook such as further social instability and weak policy implementation. These risks could translate into lower oil revenues, deteriorating the fiscal position and potentially escalating inflation levels.
Iraq’s macroeconomic performance over the past few years has been sound primarily on the back of a revival in oil production. In 2012, oil production averaged 3.1m barrels a day (bpd), the highest level in over 30 years. Real GDP has accelerated at an average growth rate of 6.4 percent during 2005-12 reflecting increased oil production and high oil prices.
However, high economic growth based on the expansion of the oil sector may not be sufficient to ensure continued prosperity. The lack of economic diversification to date makes Iraq’s economic growth sensitive to the fluctuations of international oil prices and could undermine macroeconomic stability. Hence, economic diversification could be a challenge for the Iraqi government both to create jobs and promote income-generating opportunities for the majority of the population. The International Monetary Fund (IMF) has been involved in supporting the government’s medium-term economic reform program, thereby helping the country improve fiscal sustainability and reduce its vulnerability to sudden drops in oil revenues.
Iraq continues to face development challenges despite the recent resurgence in economic growth. Indeed, there is a need to rebuild infrastructure and institutions, a task made difficult by the prospect of social instability. In addition, the impact of the war and sanctions, have all contributed to a deterioration in Iraq’s social indicators in recent years. For example, the infant mortality rate is one of the worst in the Middle East and North Africa region. Furthermore, school enrolment has declined over the past decade as a result of the low quality of and low returns to education.
During 2007-12, consumption among the lowest 40 percent of the population by income group grew only by 1.1 percent annually, lower than the average rate of consumption growth for the population as a whole (1.8 percent), suggesting that the income distribution is becoming more skewed.
Looking ahead, QNB Group expects Iraq’s real GDP growth to rise to 6.3 percent in 2014, as oil production increases further together with a rapid expansion in government services, trade and construction.

In addition, investment is set to grow strongly in several large oilfields and as infrastructure development gathers momentum.
However, the challenging social context, external shocks and a weak economic structure represent risks to Iraq’s short-term outlook.
Over the medium term, the key challenge to the Iraqi economy remains to develop its nonoil sector, which could provide for diversification, higher living standards, and better social conditions for the Iraqi people.


Egypt’s creative solutions to the plastic menace

Updated 8 min 13 sec ago

Egypt’s creative solutions to the plastic menace

  • Egyptian social startups are taking alternative approaches to fostering awareness and reducing waste
  • While initiatives around the world are taking action to combat this problem, some Egyptian projects are doing it more creatively

CAIRO: Global plastics production reached 348 million tons in 2017, rising from 335 million tons in 2016, according to Plastics Europe. 

Critically, most plastic waste is not properly managed: Around 55 percent of it was landfilled or discarded in 2015. These numbers are extremely concerning because plastic products take anything from 450 to 1,000 years to decompose, and the effects on the environment, especially on marine and human life, are catastrophic.

While initiatives around the world are taking action to combat this problem, some Egyptian projects are doing it more creatively.

“We’re the first website in the Middle East and North Africa that trades waste,” said Alaa Afifi, founder and CEO of Bekia. “People can get rid of any waste at their disposal — plastic, paper and cooking oil — and exchange it for over 65 products on our website.”

Products for trading include rice, tea, pasta, cooking oil, subway tickets and school supplies.

Bekia was launched in Cairo in 2017. Initially, the business model did not prove successful.

“We used to rent a car and go to certain locations every 40 days to collect waste from people,” Afifi, 26, explained. “We then created a website and started encouraging people to use it.”

After the website was launched, people could wait at home for someone to collect the waste. “Instead of 40 days, we now could visit people within a week.”

To use Bekia’s services, people need to log onto the website and specify what they want to discard. They are assigned points based on the waste they are offering, and these points can be used in one of three ways: Donated to people in need, saved for later, or exchanged for products. As for the collected waste, it is given to specialized recycling companies for processing.

“We want to have 50,000 customers over the next two years who regularly use our service to get rid of their waste,” Afifi said.  

Trying to spread environmental awareness has not been easy. “We had a lot of trouble with initial investment at first, and we got through with an investment that was far from enough. The second problem we faced was spreading this culture among people — in the first couple of months, we received no orders,” Afifi said.

The team soldiered on and slowly built a client base, currently serving 7,000 customers. In terms of what lies ahead for Bekia, he said: “We’re expanding from 22 to 30 areas in Cairo this year. We’re launching an app very soon and a new website with better features.”

Go Clean, another Egyptian recycling startup dedicated to raising environmental awareness, works under the patronage of the Ministry of Environment. “We started in 2017 by recycling waste from factories, and then by February 2019 we started expanding,” said founder and CEO Mohammed Hamdy, 30.

The Cairo-based company collects recyclables from virtually all places, including households, schools, universities, restaurants, cafes, companies and embassies. The customers separate the items into categories and then fill out a registration form. Alternatively, they can make contact through WhatsApp or Facebook. A driver is then dispatched to collect the waste, carrying a scale to weigh it. 

“The client can be paid in cash for the weight of their recyclables, or they can make a donation to a special needs school in Cairo,” Hamdy explained. There is also the option of trading the waste for dishwashing soap, with more household products to be added in the future.

Trying to cover a country with 100 million people was never going to be easy, and Go Clean faced some logistical problems. It overcame them by hiring more drivers and getting more trucks. There was another challenge along the way: “We had to figure out a way to train the drivers, from showing them how to use GPS and deal with clients,” said Hamdy.

“We want to spread awareness about the environment everywhere. We go to schools, universities, companies and even factories to give sessions about the importance of recycling and how dangerous plastic is. We’re currently covering 20 locations across Cairo and all of Alexandria. We want to cover all of Egypt in the future,” he added.

With a new app on the way, Hamdy said things are looking positive for the social startup, and people are becoming invested in the initiative. “We started out with seven orders per day, and now we get over 100.”