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B) The existing situation now.

Before the invasion of U.S.A, Iraq's economy is dominated by the petroleum

sector, which has traditionally provided about 95% of foreign exchange earnings. In the

1980s, financial problems caused by massive expenditures in the eight-year war with Iranand damage to oil export facilities by Iran led the government to implement austerity

measures, borrow heavily, and later reschedule foreign debt payments; Iraq suffered

economic losses of at least $100billion from the war

The greatest effect of the 2003 war on Iraqs economy was the subsequent

decline in oil and electricity production. Oil production had been running at 2.5 million

bpd before the war. It dropped to near zero in April; exports ceased until June.

Electricity generation fell by about 25 percent, not regaining pre-war levels until

October 2003. Based on the analysis and research conducted that time, the International

Monetary Fund estimates that GDP fell by about 22 percent in dollar terms for 2003.

However in the existing situation now, there was a slight economic expansion in Iraq as

expected. In addition to private-sector growth in Iraq past few years, employment driven

by public spending is rising, with the Coalition having created about 380,000 jobs

directly as of early March. About 220,000 of these jobs were in security or national

defense, with another 68,000 persons working as civilian contractors on Coalition

projects and the remainder in regional jobs programs or military support.

In the current situation, the GDP of Iraq is estimated around $94.1 billion which

has a slight growth after it falls drastically because of the invasion by the American. Besides that,

the increment in the labor force of the Iraq is also another factor which contributes a little growth

in the economic of that country. According to the International Monetary Fund said last year

that the unemployment rate in Iraq was 60 percent, but according to recent studies quoted

by the US-led coalition the ratio of people out of work has fallen to 25 30 percent.

Following is the statistic of the Iraq economic in the current situation :

http://en.wikipedia.org/wiki/Iraqhttp://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/Iranhttp://en.wikipedia.org/wiki/1000000000_(number)http://en.wikipedia.org/wiki/Iraqhttp://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/Iranhttp://en.wikipedia.org/wiki/1000000000_(number)

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Statistics

GDP ranking 60th (2005 est.)

GDP $94.1 billion (2006 est.)

GDP growth 2.4% (2005 est.)

GDP per capita $3,400 (2005 est.)

GDP by sector agriculture (7.3%), industry (66.6%), services (26.1%) (2004 est.)

Inflation 40.0% (2005 est.)

Labour force 6.7 million (2005 est.)

Unemployment 25% to 30% (2005 est.)

Main industries petroleum, chemicals, textiles, construction materials, food processing,fertilizer, metal fabrication/processing

In terms of the production possibilities curve, there will be inward or outward

movement of the curve which is influence by many factors that we have discussed

before. For the Iraq production possibilities curve in the existing situation now, there

will be a modest outward shift of the curve because of the economic factors such as a

slight increased in the economy growth and also increment in the employment rate. The

growth in the economy which directly or indirectly increase the supplies of resource,

improve the resources quality and also invention of new technologies will move the

production possibilities curve to the right allowing Iraq to produce larger number of

output in future.

http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/Chemical_industryhttp://en.wikipedia.org/wiki/Textileshttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Fertilizerhttp://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/Chemical_industryhttp://en.wikipedia.org/wiki/Textileshttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Fertilizer