• GDP Growth Rates: Iraq versus China

    June 6, 2011

    Tags: , , ,
    Posted in: Embassy/State, Iraq, Other Ideas

    SecState Clinton addressed the Iraq business forum Friday, and was predictably encouraging but unpredictably lightly balanced in her advice to American companies to invest in Iraq.

    One line from her remarks stands out:

    According to the IMF, Iraq is projected to grow faster than China in the next two years. Now, let me repeat that, because when I read it I said, okay, are you sure because we always think of China as being the juggernaut? But no, indeed, Iraq is projected to grow faster than China.

     

    Sadly, none of the media covering the remarks bothered to do anything other than to repeat the Secretary’s claim.

    It was hard to track down, and it is always possible to prove green is yellow with the right statistics, but the statement is sort of true.

    The International Monetary Fund projected Iraq’s real GDP growth at 12.2% in 2011 compared to an estimate of 1% in 2010, and forecast non-oil growth at 5% this year relative to 4.5% last year.

    China’s GDP growth rate projection by the IMF is 9.70%

    So, breaking it down:

    SecState Clinton fudged it a bit. Percentages are fine, but in real dollars China’s growth is huge, Iraq’s much more modest. China’s is based on a much clearer record of growth, and more established economics.

    More importantly, most of the IMF’s positive prediction for growth in Iraq is based on oil revenues, that 12.5% growth versus 5% for non-oil growth. It is unclear (reader help invited) how much of the oil growth is based on the rising price of oil versus the rising production rate of oil in Iraq. Crude oil futures prices are up over 26% for the year, while Iraq’s oil output is relatively flat. In other words, a lot of the oil growth may be based on prices rising, something wholly outside of Iraq’s control and obviously a very volatile factor. China’s growth projections are based on a much broader range of industries (albeit also subject to their own, less swinging, volatilities).

    Bottom line:
    Points to Clinton for a reasonably balanced set of remarks (“I do not want to sugarcoat the difficulties. I think, among friends, we need to have an honest conversation about what is it we all need to do to realize these very positive projections.”) given the mandate of the day, with a minor deduction for some hazy use of statistics.

    We’ll also note she was a little casual about the dreary levels of violence in Iraq (five US soldiers were killed today in Iraq), but did mention the dirty corruption. She did not discuss, but I am sure her audience knew, that following Thursday’s raid on the offices of the Trade Bank of Iraq (TBI), CNBC reported that Iraqi authorities issued an arrest warrant for the head of the bank, which itself is under investigation for alleged irregularities. The move comes as al Maliki faces growing discontent over rampant corruption and poor public services.

    Little good to be said for the accompanying fact sheet, which is largely happy talk about what is supposed to happen in the future with little injection of the current realities.

    Low marks to the media coverage for not bothering to do much more than simply repeat without context or explanation what Clinton said, absent quote marks, as “news.” Maybe none of this really matters anymore and the media, like State, is just going through the motions.



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