By Dr. Bayad Jamal Ali
It is noticeable in every day discussions in Kurdistan the effect of the economic and financial crisis, and many television channels hold interviews and seminars with people from different fields to talk about the crisis and its impact. Observing these discussions, we can notice that there are very different answers and analysis on both sides of the spectrum , some people suffer and complain a lot, others say the impact is exaggerated, and many others in between. However, neither the government nor the business community and people have accurate answers, and each give an explanation according to their backgrounds. The Kurdistan Regional Government give vague answers and promises and a better life as all politicians do everywhere, on the other side, business people acknowledge some difficulties but consider the crisis temporary and “they have done business in worse times”, maybe their social and business status prevent them from stating more facts, and to see the people`s reaction that haven’t received salaries for months and the suffering of paying their bills, we can see heart-breaking answers.
Here we need to raise a question, how the Kurdistan Regional Government and the political leadership can make decisions and give promises when there are no indicators to work with?
In all institutionalized countries and even some of non- institutionalized, countries produce economic indicators in order that the government, central bank, investors, and normal citizens have complete information on the country`s economic status before making decisions. There are many indicators that have extremely important value in knowing where a country is going, and help to diagnose the issues, and make the process of an informed decision easier to undertake. For example, during the past 2 years the United States Federal Reserve with all their indicators and all their research and reports available on their economy, they met tens of times until they decided last December that they will increase the interest rates half a point.
There are many economic and financial indicators that a country needs to have from basic ones to complicated ones, we will cover some of these indicators in this article in order the reader can comprehend if these data are available how much easier and how less vague the Kurdistan economic crisis will be.
The first indicator that is important to Kurdistan to think about is the Consumer Price Index (CPI), this indicator is used to measure the price and changes in cost of living, and will help in observing the purchasing behaviour of the people, for example now we can see the people in Kurdistan are more focused on purchasing cheaper products and the drop in the demand in luxury products.
The second indicator that is crucial to mention is the Gross Domestic Product (GDP) which is a general measure of the total economic activity of a country. This indicator is one of the most important ones, as every member of the country would like to know if the economy is growing or shrinking, and what to expect from the economy.
The third indicator which is used many times and many numbers are thrown at us without true empirical data, but according to the interest of the parties participating in the election which is unemployment rate, and it is calculated through the percentage of the total labour force that is unemployed that is seeking employment. As we don’t have any figures in that matter, we can see the immigration of the Kurdish youth as a sign of high unemployment rate.
There are many other indicators that we can’t cover all like stock market, manufacturing activities, inventory levels, retail sales, building permits, housing market, level of new business start-ups, changing the in gross domestic product, income and wages, currency strength, interest rates, corporate profits, balance of trade, value of commodity substitutes.
The government, the society, the businesses, the investors, the employees, and every member of the country must have information and indicators in order to make an informed decision and stop wild guessing and shooting in the dark. Right now all the indicator that is considered in Kurdistan are the price of crude oil, and the salaries from the Iraqi government, all the economy is based on two variables that are out of our control. Can you imagine if all these economic indicators are produced and everyone can make informed decisions what difference could it make?
