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US official says Iraq economy growing

Gain of 4 percent expected this year

BAGHDAD -- Iraq's economy is expected to grow by 4 percent this year and by double digits in 2006 as reconstruction efforts begin to bear fruit, a US official said yesterday. But the cost of the insurgency remains high, both in financial and emotional terms.

Iraqi merchants complain that business has declined because bombings have terrorized customers and say the government must do more to help them.

Dan Speckhard, the US official in charge of reconstruction in Iraq, said 16 percent to 20 percent of reconstruction money goes to providing security for businesses. He said the cost of rehabilitation projects is high because the security situation is ''tenuous and difficult."

Nevertheless, Speckhard said, Iraq's ''fundamentals are there."

''Iraq's economy will grow at 4 percent this year and accelerate into the double digits next year," he said. ''Per capita income is nearly double what it was two years ago, [and] sales of consumer and durable goods are booming."

Although unemployment remains a problem, more than 30,000 new businesses registered with the government in the last year, Speckhard said.

In Baghdad, where 23 percent of Iraq's 27 million residents live, business owners have charted ups and downs.

Kadhim Morshed Salloum, a clothing merchant, said in the weeks after the fall of Saddam Hussein, ''demand increased and commerce flourished."

''But during the last six months, the market has been fluctuating for various reasons," he said. ''Many families stopped going to the market because of the security situation. Before, many women used to come by themselves, but now they go out only with their husbands or brothers."

A constant complaint in Baghdad has been electricity, and it has become part of the battle against insurgents, said Brigadier General Bill McCoy, the commander of the US Army Corps of Engineers.

Power plants in Iraq have the capacity to generate 10-12 hours of electricity a day for most of the country, and those outside of the capital mostly receive it, he said. But Baghdad remains a problem, with an average of only four hours a day in November because of downed transmission lines.

Speckhard said the Iraqi government has started receiving more financial support. But Speckhard said Iraq continued to have a serious unemployment problem. Reliable figures are unavailable.

A study by the Brookings Institution estimates that as of September, unemployment stood between 27 percent and 40 percent nationwide -- down from 60 percent in the months after Hussein's fall in April 2003.

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