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Iraq vs. Kuwait

Economy

IraqKuwait
Economy - overview

Iraq's GDP growth slowed to 1.1% in 2017, a marked decline compared to the previous two years as domestic consumption and investment fell because of civil violence and a sluggish oil market. The Iraqi Government received its third tranche of funding from its 2016 Stand-By Arrangement (SBA) with the IMF in August 2017, which is intended to stabilize its finances by encouraging improved fiscal management, needed economic reform, and expenditure reduction. Additionally, in late 2017 Iraq received more than $1.4 billion in financing from international lenders, part of which was generated by issuing a $1 billion bond for reconstruction and rehabilitation in areas liberated from ISIL. Investment and key sector diversification are crucial components to Iraq's long-term economic development and require a strengthened business climate with enhanced legal and regulatory oversight to bolster private-sector engagement. The overall standard of living depends on global oil prices, the central government passage of major policy reforms, a stable security environment post-ISIS, and the resolution of civil discord with the Kurdish Regional Government (KRG).

Iraq's largely state-run economy is dominated by the oil sector, which provides roughly 85% of government revenue and 80% of foreign exchange earnings, and is a major determinant of the economy's fortunes. Iraq's contracts with major oil companies have the potential to further expand oil exports and revenues, but Iraq will need to make significant upgrades to its oil processing, pipeline, and export infrastructure to enable these deals to reach their economic potential.

In 2017, Iraqi oil exports from northern fields were disrupted following a KRG referendum that resulted in the Iraqi Government reasserting federal control over disputed oil fields and energy infrastructure in Kirkuk. The Iraqi government and the KRG dispute the role of federal and regional authorities in the development and export of natural resources. In 2007, the KRG passed an oil law to develop IKR oil and gas reserves independent of the federal government. The KRG has signed about 50 contracts with foreign energy companies to develop its reserves, some of which lie in territories taken by Baghdad in October 2017. The KRG is able to unilaterally export oil from the fields it retains control of through its own pipeline to Turkey, which Baghdad claims is illegal. In the absence of a national hydrocarbons law, the two sides have entered into five provisional oil- and revenue-sharing deals since 2009, all of which collapsed.

Iraq is making slow progress enacting laws and developing the institutions needed to implement economic policy, and political reforms are still needed to assuage investors' concerns regarding the uncertain business climate. The Government of Iraq is eager to attract additional foreign direct investment, but it faces a number of obstacles, including a tenuous political system and concerns about security and societal stability. Rampant corruption, outdated infrastructure, insufficient essential services, skilled labor shortages, and antiquated commercial laws stifle investment and continue to constrain growth of private, nonoil sectors. Under the Iraqi constitution, some competencies relevant to the overall investment climate are either shared by the federal government and the regions or are devolved entirely to local governments. Investment in the IKR operates within the framework of the Kurdistan Region Investment Law (Law 4 of 2006) and the Kurdistan Board of Investment, which is designed to provide incentives to help economic development in areas under the authority of the KRG.

Inflation has remained under control since 2006. However, Iraqi leaders remain hard-pressed to translate macroeconomic gains into an improved standard of living for the Iraqi populace. Unemployment remains a problem throughout the country despite a bloated public sector. Overregulation has made it difficult for Iraqi citizens and foreign investors to start new businesses. Corruption and lack of economic reforms - such as restructuring banks and developing the private sector - have inhibited the growth of the private sector.

Kuwait has a geographically small, but wealthy, relatively open economy with crude oil reserves of about 102 billion barrels - more than 6% of world reserves. Kuwaiti officials plan to increase production to 4 million barrels of oil equivalent per day by 2020. Petroleum accounts for over half of GDP, 92% of export revenues, and 90% of government income.

With world oil prices declining, Kuwait realized a budget deficit in 2015 for the first time more than a decade; in 2016, the deficit grew to 16.5% of GDP. Kuwaiti authorities announced cuts to fuel subsidies in August 2016, provoking outrage among the public and National Assembly, and the Amir dissolved the government for the seventh time in ten years. In 2017 the deficit was reduced to 7.2% of GDP, and the government raised $8 billion by issuing international bonds. Despite Kuwait's dependence on oil, the government has cushioned itself against the impact of lower oil prices, by saving annually at least 10% of government revenue in the Fund for Future Generations.

Kuwait has failed to diversify its economy or bolster the private sector, because of a poor business climate, a large public sector that employs about 74% of citizens, and an acrimonious relationship between the National Assembly and the executive branch that has stymied most economic reforms. The Kuwaiti Government has made little progress on its long-term economic development plan first passed in 2010. While the government planned to spend up to $104 billion over four years to diversify the economy, attract more investment, and boost private sector participation in the economy, many of the projects did not materialize because of an uncertain political situation or delays in awarding contracts. To increase non-oil revenues, the Kuwaiti Government in August 2017 approved draft bills supporting a Gulf Cooperation Council-wide value added tax scheduled to take effect in 2018.

GDP (purchasing power parity)$427.736 billion (2019 est.)

$409.705 billion (2018 est.)

$412.027 billion (2017 est.)

note: data are in 2010 dollars
$209.738 billion (2019 est.)

$208.845 billion (2018 est.)

$206.274 billion (2017 est.)

note: data are in 2017 dollars
GDP - real growth rate-2.1% (2017 est.)

13.1% (2016 est.)

2.5% (2015 est.)
-3.3% (2017 est.)

2.2% (2016 est.)

-1% (2015 est.)
GDP - per capita (PPP)$10,881 (2019 est.)

$10,660 (2018 est.)

$10,972 (2017 est.)

note: data are in 2010 dollars
$49,854 (2019 est.)

$50,479 (2018 est.)

$50,856 (2017 est.)

note: data are in 2017 dollars
GDP - composition by sectoragriculture: 3.3% (2017 est.)

industry: 51% (2017 est.)

services: 45.8% (2017 est.)
agriculture: 0.4% (2017 est.)

industry: 58.7% (2017 est.)

services: 40.9% (2017 est.)
Population below poverty line23% (2014 est.)NA
Household income or consumption by percentage sharelowest 10%: 3.6%

highest 10%: 25.7% (2007 est.)
lowest 10%: NA

highest 10%: NA
Inflation rate (consumer prices)-0.1% (2019 est.)

0.3% (2018 est.)

0.2% (2017 est.)
1.5% (2017 est.)

3.5% (2016 est.)
Labor force8.9 million (2010 est.)2.695 million (2017 est.)

note: non-Kuwaitis represent about 60% of the labor force
Labor force - by occupationagriculture: 21.6%

industry: 18.7%

services: 59.8% (2008 est.)
agriculture: NA

industry: NA

services: NA
Unemployment rate16% (2012 est.)

15% (2010 est.)
1.1% (2017 est.)

1.1% (2016 est.)
Budgetrevenues: 68.71 billion (2017 est.)

expenditures: 76.82 billion (2017 est.)
revenues: 50.5 billion (2017 est.)

expenditures: 62.6 billion (2017 est.)
Industriespetroleum, chemicals, textiles, leather, construction materials, food processing, fertilizer, metal fabrication/processingpetroleum, petrochemicals, cement, shipbuilding and repair, water desalination, food processing, construction materials
Industrial production growth rate0.7% (2017 est.)2.8% (2017 est.)
Agriculture - productswheat, barley, dates, tomatoes, rice, maize, grapes, potatoes, rice, watermelonseggs, dates, tomatoes, cucumbers, poultry, milk, mutton, potatoes, vegetables, eggplants
Exports$61.4 billion (2017 est.)

$41.72 billion (2016 est.)
$84.825 billion (2018 est.)

$89.098 billion (2017 est.)
Exports - commoditiescrude petroleum, refined petroleum, gold, dates, petroleum coke (2019)crude petroleum, refined petroleum, aircraft, natural gas, industrial hydrocarbon products (2019)
Exports - partnersChina 26%, India 24%, South Korea 9%, United States 8%, Italy 6%, Greece 6% (2019)China 20%, South Korea 16%, India 15%, Japan 10%, Taiwan 6%, Vietnam 5% (2019)
Imports$39.47 billion (2017 est.)

$19.57 billion (2016 est.)
$54.556 billion (2018 est.)

$55.025 billion (2017 est.)
Imports - commoditiesrefined petroleum, broadcasting equipment, cars, jewelry, cigarettes (2019)cars, broadcasting equipment, natural gas, packaged medicines, jewelry (2019)
Imports - partnersUnited Arab Emirates 28%, Turkey 21%, China 19% (2019)China 14%, United Arab Emirates 12%, United States 10%, Saudi Arabia 6%, Japan 6%, Germany 5%, India 5% (2019)
Debt - external$73.02 billion (31 December 2017 est.)

$64.16 billion (31 December 2016 est.)
$47.24 billion (31 December 2017 est.)

$38.34 billion (31 December 2016 est.)
Exchange ratesIraqi dinars (IQD) per US dollar -

1,184 (2017 est.)

1,182 (2016 est.)

1,182 (2015 est.)

1,167.63 (2014 est.)

1,213.72 (2013 est.)
Kuwaiti dinars (KD) per US dollar -

0.3049 (2020 est.)

0.3037 (2019 est.)

0.304 (2018 est.)

0.3009 (2014 est.)

0.2845 (2013 est.)
Fiscal yearcalendar year1 April - 31 March
Public debt59.7% of GDP (2017 est.)

66% of GDP (2016 est.)
20.6% of GDP (2017 est.)

9.9% of GDP (2016 est.)
Reserves of foreign exchange and gold$48.88 billion (31 December 2017 est.)

$45.36 billion (31 December 2016 est.)
$33.7 billion (31 December 2017 est.)

$31.13 billion (31 December 2016 est.)
Current Account Balance$4.344 billion (2017 est.)

-$13.38 billion (2016 est.)
$7.127 billion (2017 est.)

-$5.056 billion (2016 est.)
GDP (official exchange rate)$231.994 billion (2019 est.)$134.638 billion (2019 est.)
Credit ratingsFitch rating: B- (2015)

Moody's rating: Caa1 (2017)

Standard & Poors rating: B- (2015)
Fitch rating: AA (2008)

Moody's rating: A1 (2020)

Standard & Poors rating: AA- (2020)
Ease of Doing Business Index scoresOverall score: 44.7 (2020)

Starting a Business score: 77.3 (2020)

Trading score: 25.3 (2020)

Enforcement score: 48 (2020)
Overall score: 67.4 (2020)

Starting a Business score: 88.4 (2020)

Trading score: 52.6 (2020)

Enforcement score: 61.4 (2020)
Taxes and other revenues35.7% (of GDP) (2017 est.)41.8% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-4.2% (of GDP) (2017 est.)-10% (of GDP) (2017 est.)
Unemployment, youth ages 15-24total: 25.6%

male: 22%

female: 63.3% (2017)
total: 15.4%

male: 9.4%

female: 30% (2016 est.)
GDP - composition, by end usehousehold consumption: 50.4% (2013 est.)

government consumption: 22.9% (2016 est.)

investment in fixed capital: 20.6% (2016 est.)

investment in inventories: 0% (2016 est.)

exports of goods and services: 32.5% (2016 est.)

imports of goods and services: -40.9% (2016 est.)
household consumption: 43.1% (2017 est.)

government consumption: 24.5% (2017 est.)

investment in fixed capital: 26.5% (2017 est.)

investment in inventories: 3.5% (2017 est.)

exports of goods and services: 49.4% (2017 est.)

imports of goods and services: -47% (2017 est.)
Gross national saving13.3% of GDP (2019 est.)

20.6% of GDP (2018 est.)

18.9% of GDP (2017 est.)
40.8% of GDP (2018 est.)

35.5% of GDP (2017 est.)

37.1% of GDP (2015 est.)

Source: CIA Factbook