WASHINGTON — Surging sectarian bloodshed in Iraq and an escalating regional war are undercutting one of the world’s fastest-growing economies and undermining U.S. aspirations for making Iraq a model for Middle East democracy.

Two years after U.S. forces withdrew, bombings and suicide attacks scar weddings, funerals and cafes, as al-Qaida-linked groups attack Shiite targets. The assaults have killed more than 5,000 this year – levels that haven’t been seen since 2008 and almost double 2010’s toll.

Barclays’ investment-banking unit cited the violence when it cut forecasts for Iraq’s gross domestic product, oil output and exports, a decade after the 2003 U.S.-led invasion ousted Saddam Hussein. Due to revived oil production, Iraq’s 8.4 percent GDP growth in 2012 was among the world’s best. Barclays this month reduced its 2013 projection to 9.1 percent from 10.1 percent, and cut 2014’s estimate to 9.3 percent from 10.2 percent.

“It’s striking how different the outlook for Iraq is today than what it was as late as June, when the question was who would make room for growing Iraqi production in the marketplace,” said Daniel Yergin, author of “The Quest: Energy, Security and the Remaking of the Modern World.” “Everyone is bringing down their forecast in light of what’s actually happening on the ground.”


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