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Iraq Economy Profile 2017

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Economy - overviewIraq's GDP grew by more than 10% in 2016, the best performance in the past decade, because of rising oil prices, which are a significant driver of Iraqi GDP. During 2016, security and financial stability throughout Iraq began to improve as Iraqi Security Forces made gains against the ongoing insurgency and oil prices slowly rose. The Iraqi Government entered into a Stand-By Arrangement (SBA) with the IMF in July 2016, which helped stabilize its finances by encouraging improved fiscal management, needed economic reform, and expenditure reduction. Iraq passed its first SBA review in December 2016, and additional progress on the program is critical to its long-term fiscal health. Diversification efforts – a key component to Iraq’s long-term economic development – require a strengthened investment climate to bolster private-sector engagement. Sustained improvements in the overall standard of living depend heavily on global oil prices, the central government passing major policy reforms, and progress in the conflict with ISIL.

Iraq's largely state-run economy is dominated by the oil sector, which provides more than 90% of government revenue and 80% of foreign exchange earnings. Oil exports in 2016 averaged 3.3 million barrels per day from southern Iraq, up from 2015. Moreover, the slow recovery of global oil prices improved export revenues throughout 2016, although monthly revenue remained below 2015 levels. 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.

Iraqi oil exports from northern fields are hampered by fundamental disagreements between the Iraqi Government and autonomous Kurdistan Regional Government (KRG) in Iraq’s Kurdistan region (IKR) on the roles 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 whose status is in dispute between Baghdad and Erbil. Some of the companies have left or returned blocks, citing lack of commercial prospects. In 2014, the KRG began exporting its oil unilaterally 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 four provisional oil- and revenue-sharing deals since 2009, all of which collapsed. In September 2016, the two sides began implementing a fifth ad hoc agreement to split oil exports from Baghdad-controlled fields in Kirkuk.

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. Encouraging private enterprise through deregulation would make it easier for Iraqi citizens and foreign investors to start new businesses. Rooting out corruption and implementing reforms - such as restructuring banks and developing the private sector - would be important steps in this direction.
GDP (purchasing power parity)$596.7 billion (2016 est.)
$541 billion (2015 est.)
$554.1 billion (2014 est.)
note: data are in 2016 dollars
GDP (official exchange rate)$173 billion (2016 est.)
GDP - real growth rate10.3% (2016 est.)
-2.4% (2015 est.)
-0.4% (2014 est.)
GDP - per capita (PPP)$16,500 (2016 est.)
$15,400 (2015 est.)
$16,200 (2014 est.)
note: data are in 2016 dollars
Gross national saving10.6% of GDP (2016 est.)
18.2% of GDP (2015 est.)
28.1% of GDP (2014 est.)
GDP - composition, by end usehousehold consumption: 50.4%
government consumption: 18.8%
investment in fixed capital: 23.5%
investment in inventories: -4.5%
exports of goods and services: 39.7%
imports of goods and services: -27.9% (2016 est.)
GDP - composition by sectoragriculture: 5.7%
industry: 45.1%
services: 49.3% (2016 est.)
Population below poverty line23% (2014 est.)
Labor force8.9 million (2010 est.)
Labor force - by occupationagriculture: 21.6%
industry: 18.7%
services: 59.8% (2008 est.)
Unemployment rate16% (2012 est.)
15% (2010 est.)
Household income or consumption by percentage sharelowest 10%: 3.6%
highest 10%: 25.7% (2007 est.)
Budgetrevenues: $52.43 billion
expenditures: $77.87 billion (2016 est.)
Taxes and other revenues30.3% of GDP (2016 est.)
Budget surplus (+) or deficit (-)-14.7% of GDP (2016 est.)
Public debt79% of GDP (2016 est.)
63.9% of GDP (2015 est.)
Inflation rate (consumer prices)2.4% (2016 est.)
1.4% (2015 est.)
Central bank discount rate6% (2016)
6% (2015)
Commercial bank prime lending rate4.5% (31 December 2016 est.)
6% (31 December 2015 est.)
Stock of narrow money$54.53 billion (31 December 2016 est.)
$55.36 billion (31 December 2015 est.)
Stock of broad money$74.61 billion (30 August 2016 est.)
$80.83 billion (31 December 2015 est.)
Stock of domestic credit$3.191 million (31 December 2016 est.)
$1.773 million (31 December 2015 est.)
Market value of publicly traded shares$4 billion (9 December 2011)
$2.6 billion (31 July 2010)
$2 billion (31 July 2009 est.)
Agriculture - productswheat, barley, rice, vegetables, dates, cotton; cattle, sheep, poultry
Industriespetroleum, chemicals, textiles, leather, construction materials, food processing, fertilizer, metal fabrication/processing
Industrial production growth rate7% (2016 est.)
Current Account Balance-$12.2 billion (2016 est.)
-$11.63 billion (2015 est.)
Exports$44.67 billion (2016 est.)
$54.67 billion (2015 est.)
Exports - commoditiescrude oil 99%, crude materials excluding fuels, food, live animals
Exports - partnersChina 22.8%, India 20.4%, South Korea 11.3%, US 7.8%, Italy 6.7%, Greece 6.1% (2015)
Imports$43.27 billion (2016 est.)
$43.84 billion (2015 est.)
Imports - commoditiesfood, medicine, manufactures
Imports - partnersTurkey 20.3%, Syria 19.2%, China 18.8%, US 4.7%, Russia 4.3% (2015)
Reserves of foreign exchange and gold$44.15 billion (31 December 2016 est.)
$54.06 billion (31 December 2015 est.)
Debt - external$68.01 billion (31 December 2016 est.)
$60.28 billion (31 December 2015 est.)
Stock of direct foreign investment - at home$26.63 billion (2015 est.)
$23.16 billion (2014 est.)
Stock of direct foreign investment - abroad$2.109 billion (2015 est.)
$1.956 billion (2014 est.)
Exchange ratesIraqi dinars (IQD) per US dollar -
1,179.3 (2016 est.)
1,167.63 (2015 est.)
1,167.63 (2014 est.)
1,213.72 (2013 est.)
1,166.17 (2012 est.)
Fiscal yearcalendar year

Source: CIA World Factbook
This page was last updated on July 9, 2017

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