Rising incomes, declining violence in Iraq attract worldwide automakers

Article by Christian Andrei, on March 20, 2012

Iraq is attracting the attention of worldwide vehicle manufacturers such as Volkswagen Group, General Motors Co. and Ford Motor Co. The country has the fifth biggest oil reserves in the world. It also has a population larger than Saudi Arabia. During Saddam Hussein's reign, western vehicles were shut out from the country by sanctions. The lack of contemporary cars is apparent in the survival of many VW Passat units shipped to the country from Brazil from 1983 to 1990 in exchange for oil. These days, the declining incidence of violence and the rising incomes are boosting the demand for a middle-class lifestyle -- including vehicles -- after years of conflict followed by the U.S.-led invasion that expelled Hussein. One of the popular models is the Dodge Charger of Chrysler Group.

The Iraqis have dubbed it "Obama" after the president of the United States. Automobiles have constantly served as powerful emblems of a society. Signs of optimism in the midst of continuing political strains and violence are the rush of worldwide carmakers into the country as well as the increasing sales. According to Dubai-based economist Philippe Dauba-Pantanacce at Standard Chartered Bank, Iraq's economy, may grow quicker than 10% this year, outperforming all Middle Eastern and North African countries, thanks to the positive oil revenues and foreign investment. He further stated that higher incomes are generally accompanied by higher spending on durable goods like automobiles.

This growth is highlighted by safer streets. During the fall of Saddam Hussein in 2003, deaths totaled 7,300. Last year, about 1,500 Iraqi civilians were killed by sniper ambushes, bombs and other attacks, based on the data of Brookings Institute's Iraq index. Civilian fatalities were at peak in 2006 when it reached 34,500. The economic benefits brought about by the revival of Iraq are clear. One of the many who benefited from these is Sarmad Khalid, a 54-year-old Iraqi whose monthly wage has risen from the equivalent of $2.60 in Hussein's era to about $400. [source: Autonews]

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