Assessing The Impact Of Politics On Growth

While Iraq has significant untapped economic potential, deepening divides within the government threaten to derail the country's progress and dampen its growth trajectory. The coalition government formed in December 2010 appears to be fragmenting, as both internal disagreements between coalition partners and external pressure from the public over a lack of services threaten to weaken its legitimacy. We outline below several potential scenarios that take into account possible outcomes to the current political impasse, and we caution that a break-up of the current government would likely presage a sharp slowdown in economic activity.

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