SULAIMANI, Kurdistan region ‘Iraq’,— Total imports of goods to Iraq’s Kurdistan region fell 54 percent from a year earlier to 4.7 trillion Iraqi dinars (approx. $3,8 billion), the lowest since 2009 as overall demand weakens amid a decline of economic growth, according to the Kurdistan Union of Importers and Exporters.

The report is based on data available at Kurdistan’s main border gates, which stand for the bulk of imports to the region.

Figures from two international airports in Erbil and Sulaimani were not included as they make up a fraction of the overall imports, the union said.

In 2014 an estimated 10.5 trillion dinars ($8.5 billion) worth of goods were imported into the region by Kurdish and foreign traders but it dropped by nearly 6 trillion dinars ($5 billion), the report notes, drawing on data provided by the border gates of Ibrahim Khalil to Turkey, and the Bashmakh gate to Iran.

“It has primarily long-term effects on state revenues but with limited impact on ordinary people’s life standards in the short run,” said Ata Muhammad, at the KUIE.

“A big portion of the imported goods was food products and now people have to rely more on domestic goods and consume a bit more economically as people do everywhere,” Muhammad said.

Turkey has the lion’s share of the trade with the Kurdistan region. Turkish exports to Iraq amounted to an estimated $5.5 billion in 2013, according to Turkish government’s official figures. Most of the trade takes place at the main border gate of Ibrahim Khalil.

Kurdistan’s second trading partner is neighboring Iran through the Bashmakh border gate at an estimated total of $2 billion a year.

As the Kurdish region experienced a rapid economic boom since 2005, it invested heavily on rebuilding its impoverished infrastructure.

Vast amounts of construction material were imported to feed the lucrative building sector, which saw a dramatic rise of prices of, among others, the real estate.

As the monetary crisis deteriorated in the region following the free-fall of oil prices, the real estate business was hit severely which also led to a notable reduction of imports of construction products to the region.

“My firm imported goods worth over $9 million in 2014 but we reduced it to $6 million last year,” said Pistiwan Kanebi who owns a retail company selling cleaning objects in Sulaimani.

To cope with the fiscal crisis, the Kurdistan Regional Government (KRG) introduced unprecedented monetary policies and austerity measures with immediate effect on public salaries that were cut in half for most middle-income earners.

The government has said it will pay back the outstanding amount of the salaries to some 1.5 million government employees when oil prices rise again as it stands for over 90 percent of revenues.

The Kurdistan region, like the rest of Iraq, has only limited taxing regulations for employees, which the KRG could not rely on to finance its expenses.

To attract foreign investment and help domestic entrepreneurship, authorities introduced lengthy tax-free breaks up of 10 years in most cases.

“I have never seen the demand fade away as it has this year,” said Hersh Rahman who owns a tailoring shop in Sulaimani bazar making traditional Kurdish clothes.

“This month last year, we worked from eight in the morning to eleven in the evening and still we couldn’t cope with all the demand, but this year it’s all dead,” said Rahman as the Kurds prepare for the annual celebration of their traditional New Year festivity, Newroz.

By Pshtiwan Jamal

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