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Iraq vs. Saudi Arabia

Economy

IraqSaudi Arabia
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.

Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses about 16% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 87% of budget revenues, 42% of GDP, and 90% of export earnings.

Saudi Arabia is encouraging the growth of the private sector in order to diversify its economy and to employ more Saudi nationals. Approximately 6 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors; at the same time, however, Riyadh is struggling to reduce unemployment among its own nationals. Saudi officials are particularly focused on employing its large youth population.

In 2017, the Kingdom incurred a budget deficit estimated at 8.3% of GDP, which was financed by bond sales and drawing down reserves. Although the Kingdom can finance high deficits for several years by drawing down its considerable foreign assets or by borrowing, it has cut capital spending and reduced subsidies on electricity, water, and petroleum products and recently introduced a value-added tax of 5%. In January 2016, Crown Prince and Deputy Prime Minister MUHAMMAD BIN SALMAN announced that Saudi Arabia intends to list shares of its state-owned petroleum company, ARAMCO - another move to increase revenue and outside investment. The government has also looked at privatization and diversification of the economy more closely in the wake of a diminished oil market. Historically, Saudi Arabia has focused diversification efforts on power generation, telecommunications, natural gas exploration, and petrochemical sectors. More recently, the government has approached investors about expanding the role of the private sector in the health care, education and tourism industries. While Saudi Arabia has emphasized their goals of diversification for some time, current low oil prices may force the government to make more drastic changes ahead of their long-run timeline.

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
$1,609,323,000,000 (2019 est.)

$1,604,007,000,000 (2018 est.)

$1,565,891,000,000 (2017 est.)

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

13.1% (2016 est.)

2.5% (2015 est.)
-0.9% (2017 est.)

1.7% (2016 est.)

4.1% (2015 est.)
GDP - per capita (PPP)$10,881 (2019 est.)

$10,660 (2018 est.)

$10,972 (2017 est.)

note: data are in 2010 dollars
$46,962 (2019 est.)

$47,597 (2018 est.)

$47,309 (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: 2.6% (2017 est.)

industry: 44.2% (2017 est.)

services: 53.2% (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.)
-2% (2019 est.)

-4.5% (2018 est.)

-0.8% (2017 est.)
Labor force8.9 million (2010 est.)13.8 million (2017 est.)

note: comprised of 3.1 million Saudis and 10.7 million non-Saudis
Labor force - by occupationagriculture: 21.6%

industry: 18.7%

services: 59.8% (2008 est.)
agriculture: 6.7%

industry: 21.4%

services: 71.9% (2005 est.)
Unemployment rate16% (2012 est.)

15% (2010 est.)
6% (2017 est.)

5.6% (2016 est.)

note: data are for total population; unemployment among Saudi nationals is more than double
Distribution of family income - Gini index29.5 (2012 est.)45.9 (2013 est.)
Budgetrevenues: 68.71 billion (2017 est.)

expenditures: 76.82 billion (2017 est.)
revenues: 181 billion (2017 est.)

expenditures: 241.8 billion (2017 est.)
Industriespetroleum, chemicals, textiles, leather, construction materials, food processing, fertilizer, metal fabrication/processingcrude oil production, petroleum refining, basic petrochemicals, ammonia, industrial gases, sodium hydroxide (caustic soda), cement, fertilizer, plastics, metals, commercial ship repair, commercial aircraft repair, construction
Industrial production growth rate0.7% (2017 est.)-2.4% (2017 est.)
Agriculture - productswheat, barley, dates, tomatoes, rice, maize, grapes, potatoes, rice, watermelonsmilk, dates, poultry, fruit, watermelons, barley, wheat, potatoes, eggs, tomatoes
Exports$61.4 billion (2017 est.)

$41.72 billion (2016 est.)
$221.1 billion (2017 est.)

$183.6 billion (2016 est.)
Exports - commoditiescrude petroleum, refined petroleum, gold, dates, petroleum coke (2019)crude petroleum, refined petroleum, polymers, industrial alcohols, natural gas (2019)
Exports - partnersChina 26%, India 24%, South Korea 9%, United States 8%, Italy 6%, Greece 6% (2019)China 20%, India 11%, Japan 11%, South Korea 9%, United States 5% (2019)
Imports$39.47 billion (2017 est.)

$19.57 billion (2016 est.)
$119.3 billion (2017 est.)

$127.8 billion (2016 est.)
Imports - commoditiesrefined petroleum, broadcasting equipment, cars, jewelry, cigarettes (2019)cars, broadcasting equipment, refined petroleum, packaged medicines, telephones (2019)
Imports - partnersUnited Arab Emirates 28%, Turkey 21%, China 19% (2019)China 18%, United Arab Emirates 12%, United States 9%, Germany 5% (2019)
Debt - external$73.02 billion (31 December 2017 est.)

$64.16 billion (31 December 2016 est.)
$205.1 billion (31 December 2017 est.)

$189.3 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.)
Saudi riyals (SAR) per US dollar -

3.7514 (2020 est.)

3.75 (2019 est.)

3.7518 (2018 est.)

3.75 (2014 est.)

3.75 (2013 est.)
Fiscal yearcalendar yearcalendar year
Public debt59.7% of GDP (2017 est.)

66% of GDP (2016 est.)
17.2% of GDP (2017 est.)

13.1% of GDP (2016 est.)
Reserves of foreign exchange and gold$48.88 billion (31 December 2017 est.)

$45.36 billion (31 December 2016 est.)
$496.4 billion (31 December 2017 est.)

$535.8 billion (31 December 2016 est.)
Current Account Balance$4.344 billion (2017 est.)

-$13.38 billion (2016 est.)
$15.23 billion (2017 est.)

-$23.87 billion (2016 est.)
GDP (official exchange rate)$231.994 billion (2019 est.)$792.849 billion (2019 est.)
Credit ratingsFitch rating: B- (2015)

Moody's rating: Caa1 (2017)

Standard & Poors rating: B- (2015)
Fitch rating: A (2019)

Moody's rating: A1 (2016)

Standard & Poors rating: A- (2016)
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: 71.6 (2020)

Starting a Business score: 93.1 (2020)

Trading score: 76 (2020)

Enforcement score: 65.3 (2020)
Taxes and other revenues35.7% (of GDP) (2017 est.)26.4% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-4.2% (of GDP) (2017 est.)-8.9% (of GDP) (2017 est.)
Unemployment, youth ages 15-24total: 25.6%

male: 22%

female: 63.3% (2017)
total: 28.8%

male: 19.9%

female: 62.6% (2018 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: 41.3% (2017 est.)

government consumption: 24.5% (2017 est.)

investment in fixed capital: 23.2% (2017 est.)

investment in inventories: 4.7% (2017 est.)

exports of goods and services: 34.8% (2017 est.)

imports of goods and services: -28.6% (2017 est.)
Gross national saving13.3% of GDP (2019 est.)

20.6% of GDP (2018 est.)

18.9% of GDP (2017 est.)
33.6% of GDP (2019 est.)

33.2% of GDP (2018 est.)

30.4% of GDP (2017 est.)

Source: CIA Factbook