Iraq Economic Outlook
An oil-dependent economy with structural weaknesses:
Iraq’s economy is heavily reliant on oil, which accounts for over 90% of government revenue. While high global oil prices provide short-term fiscal relief, the country remains vulnerable to commodity price fluctuations. Despite vast energy wealth, Iraq struggles with economic diversification, infrastructure deficiencies, and political instability, which limit growth potential.
Weak governance and investment climate:Iraq faces significant governance challenges, including corruption, inefficient bureaucracy, and political instability. Foreign direct investment remains low due to security risks and regulatory uncertainties. Efforts to rebuild war-torn infrastructure and improve business conditions have been slow, hampering private sector development and job creation.
Unemployment and social tensions:High unemployment, particularly among young Iraqis, remains a major economic and social issue. Despite strong oil revenues, public sector employment dominates, limiting private sector expansion. Periodic protests highlight frustration over poor public services, economic mismanagement, and lack of opportunities, underscoring the need for urgent reforms.
Iraq’s economic outlook:Iraq’s economic performance will remain tied to oil prices and production levels for the foreseeable future. Long-term stability and growth require investment in non-oil sectors, infrastructure development, and governance reforms. With the right policies, Iraq has the potential to leverage its energy resources to drive broader economic development, but persistent political and security risks remain key obstacles.
Iraq's Macroeconomic Analysis:
Nominal GDP of USD 278 billion in 2024.
Nominal GDP of USD 243 billion in 2023.
Nominal GDP of USD 243 billion in 2023.
GDP per capita of USD 5,612 compared to the global average of USD 10,589.
GDP per capita of USD 5,612 compared to the global average of USD 10,589.
GDP per capita of USD 6,248 compared to the global average of USD 10,589.
Average real GDP growth of 1.9% over the last decade.
Average real GDP growth of 2.4% over the last decade.
Average real GDP growth of 2.4% over the last decade.
Sector Analysis
In 2022, services accounted for 42.3% of overall GDP, manufacturing 3.6%, other industrial activity 51.3%, and agriculture 2.8%. Looking at GDP by expenditure, private consumption accounted for 40.3% of GDP in 2021, government consumption 17.7%, fixed investment 21.4%, and net exports 20.6%.International trade
In 2013, manufactured products made up 0.0% of total merchandise exports, mineral fuels 100.0%, food 0.0%, ores and metals 0.0% and agricultural raw materials 0.0%, with other categories accounting for 0.0% of the total. In the same period, manufactured products made up 66.3% of total merchandise imports, mineral fuels 22.9%, food 7.2%, ores and metals 3.4% and agricultural raw materials 0.1%, with other goods accounting for 0.1% of the total. Total exports were worth USD 99.10 billion in 2023, while total imports were USD 56 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 2.4% in the decade to 2023. To read more about GDP growth in Iraq, go to our dedicated page.
Fiscal policy
Iraq's fiscal deficit averaged 3.5% of GDP in the decade to 2023. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 13.2% in the decade to 2023. For more information on Iraq's unemployment click here.
Inflation
Inflation averaged 1.9% in the decade to 2023. Go to our Iraq inflation page for extra insight.
Monetary Policy
Iraq's monetary policy rate ended 2024 at 5.50%, down from 6.00% a decade earlier. See our Iraq monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the dinar weakened by 8.8% vs the U.S. dollar. For more info on the dinar, click here.
Economic situation in Iraq
GDP shrank 1.5% last year, due to a slowdown in public investment and services activity plus tight OPEC+ quotas weighing on oil production. That said, a post-drought recovery in agriculture, expanded refining capacity and strong household lending growth provided support. The economy has likely remained weak so far this year. Lower oil prices vs 2024 are likely constraining government spending and broader non-oil activity. In addition, the oil sector downturn has steepened due to strict compliance with OPEC+ quotas; crude output fell 5.7% in annual terms on average in January–May, more than double the fall observed in 2024. Despite OPEC+ raising production targets for May through July, Iraq's oil output is still expected to trail last year's levels through at least August—largely because of high production seen during the same period in 2024.Iraq Economic Forecasts
Projections out to 2034.43 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 13 expert analysts.
Want to get insight on the economic outlook for Iraq in the coming years? FocusEconomics collects projections out to 2034 on 43 economic indicators for Iraq from a panel of 13 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Iraq economy. To download a sample report on the Iraq's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.