Iraq: Falling Oil Prices Reveal Iraq’s Structural Problem

Feb 19, 2015 | Etienne Lepers - International Policy Digest
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Despite all the attention to falling oil prices over the last six months, the impact on the world economy has not and will not be as large as many pundits have predicted: no disaster for exporting countries, no panacea for importing countries.

Exporting countries in the Gulf will increase their budget spending to sustain economic activity. It now seems likely that Saudi Arabia has accepted the fall in oil prices. A few years of budget deficit because of low oil prices will not be a real problem given the size of the country’s reserves.

By contrast, for overly dependent and unstable Iraq, the situation is unfortunately not as easy and the impact of low oil prices on the budget is a hard hit.