Building in Iraq

Iraq Economic Forecast

Iraq Economic Outlook

The economy has lost steam so far in 2023 relative to 2022. Oil output was down over 3% year on year in January–July on OPEC+ cuts and the suspension of crude flows via a pipeline to Turkey in March. In addition, U.S. restrictions on dollar transfers to Iraq have created a shortage of hard currency and weakened the parallel market exchange rate, likely disrupting domestic economic activity. On the flipside, the expansionary 2023–2025 budget approved in June—which set annual expenditure over 50% higher than the prior budget approved in 2021—should be boosting government spending from H2. In addition, tens of billions of dollars in investment pledges so far this year from TotalEnergies and Gulf neighbors bode well for the energy and non-energy sectors in the longer term. That said, widespread corruption and political instability could stop at least part of the pledged funds from becoming reality.

Iraq Inflation

Inflation was stable at May’s 3.4% in June, the joint-lowest level since January 2021. Inflation could rise in H2 from June levels on the weaker parallel-market dinar, the expansionary budget and the recent uptick in global energy prices. Over 2023 as a whole, the Consensus is for inflation to be close to its 2022 average.

This chart displays Economic Growth (GDP, annual variation in %) for Iraq from 2013 to 2022.

Iraq Economic Data

2018 2019 2020 2021 2022
Population (million) 38.1 39.1 40.1 41.2 42.2
GDP (USD bn) 226 232 180 206 262
GDP per capita (USD) 5,939 5,931 4,492 5,011 6,213
GDP (IQD bn) 268,919 276,158 215,662 301,153 383,064
Economic Growth (Nominal GDP, ann. var. %) 21.3 2.7 -21.9 39.6 27.2
Economic Growth (GDP, ann. var. %) 2.6 5.5 -12.0 1.6 7.0
Oil Production (mn barrels per day, aop) 4.6 4.7 4.1 4.0 4.4
Unemployment (% of active population, aop) 14.1 15.1 16.2 16.2 15.5
Fiscal Balance (% of GDP) 7.8 0.8 -13.9 -0.4 -
Public Debt (% of GDP) 47.8 45.1 84.3 59.2 -
Money (ann. var. of M2 %) 2.7 8.4 15.9 16.7 20.3
Inflation (CPI, ann. var. %, aop) 0.4 -0.2 0.6 6.0 5.0
CBI Policy Rate (%, eop) 4.00 4.00 4.00 4.00 4.00
Exchange Rate (IQD per USD, eop) 1,190 1,190 1,461 1,460 1,460
Exchange Rate (IQD per USD, aop) 1,188 1,190 1,196 1,460 1,460
Current Account Balance (USD bn) 34.4 15.8 -6.2 24.6 -
Current Account Balance (% of GDP) 15.2 6.8 -3.4 11.9 -
Merchandise Trade Balance (USD bn) 47.5 32.2 5.9 38.4 -
Merchandise Exports (USD bn) 86.4 81.6 46.8 73.1 -
Merchandise Imports (USD bn) 38.9 49.4 40.9 34.7 -
Merchandise Exports (ann. var. %) 50.0 -5.5 -42.6 56.1 -
Merchandise Imports (ann. var. %) 20.8 27.1 -17.2 -15.2 -
Foreign Direct Investment (USD bn) -4.9 -3.5 -2.9 -2.6 -2.1
International Reserves (USD bn) 60.8 63.3 48.6 58.6 89.4
International Reserves (months of imports) 18.8 15.4 14.2 20.2 -

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