Iraq Economic Forecast

Iraq Economic Outlook

September 3, 2019

The economy likely performed well in the second quarter. Oil production was up roughly 6% year-on-year in the period according to EIA data, boding well for the energy sector. Moreover, the non-oil sector should be benefiting from the loose fiscal stance and stronger electricity generation. This comes after the economy bounced back in the first quarter according to Statistical Institute data, driven by expansions in the oil and non-oil sectors. Less positively, security concerns are elevated amid intensifying U.S.-Iran and Israel-Iran tensions, which could hurt business investment. In particular, Iran-backed Iraqi paramilitary groups were targeted via air strikes in late August, with Iraqi authorities blaming Israel for the attacks. In late July, the IMF concluded a staff visit, with the Fund warning of worsening fiscal and external metrics without reform efforts.

Iraq Economic Growth

The economy should gain strength this year due to stronger oil output and expansion in the non-oil sector, although public investment could be curtailed somewhat by the 2019 budget’s focus on current spending. A fragile domestic political panorama, security concerns and geopolitical tensions between the U.S. and Iran pose the key downside risks. Our panelists expect growth of 3.6% in 2019, which is unchanged from last month’s estimate, and 4.5% in 2020.

Iraq Economy Data

Population (million)33.435.
GDP per capita (USD)7,0426,7245,1274,7525,234
GDP (USD bn)235235181172194
Economic Growth (GDP, annual variation in %)
Industrial Production (annual variation in %)5.06.722.28.0-  
Unemployment Rate8.
Fiscal Balance (% of GDP)-6.1-5.6-12.8-14.3-1.6
Public Debt (% of GDP)32.032.956.966.159.6
Inflation Rate (CPI, annual variation in %)
Policy Interest Rate (%)
Exchange Rate (vs USD)1,1651,1431,0961,1821,185
Exchange Rate (vs USD, aop)1,1631,1631,1481,1711,177
Current Account (% of GDP)1.12.6-6.4-7.82.1
Current Account Balance (USD bn)2.76.1-11.6-13.44.0
Trade Balance (USD billion)36.035.611.012.225.4
Exports (USD billion)89.885.451.341.357.6
Imports (USD billion)53.849.840.329.132.2
Exports (annual variation in %)-4.7-4.9-39.9-19.539.4
Imports (annual variation in %)7.2-7.4-19.1-27.810.7
International Reserves (USD)76.162.850.942.045.6
External Debt (% of GDP)25.224.735.338.235.7

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Iraq Facts

Exchange Rate1,1930.0 %Sep 04

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