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Iraq vs. Turkey

Economy

IraqTurkey
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.

Turkey's largely free-market economy is driven by its industry and, increasingly, service sectors, although its traditional agriculture sector still accounts for about 25% of employment. The automotive, petrochemical, and electronics industries have risen in importance and surpassed the traditional textiles and clothing sectors within Turkey's export mix. However, the recent period of political stability and economic dynamism has given way to domestic uncertainty and security concerns, which are generating financial market volatility and weighing on Turkey's economic outlook.

Current government policies emphasize populist spending measures and credit breaks, while implementation of structural economic reforms has slowed. The government is playing a more active role in some strategic sectors and has used economic institutions and regulators to target political opponents, undermining private sector confidence in the judicial system. Between July 2016 and March 2017, three credit ratings agencies downgraded Turkey's sovereign credit ratings, citing concerns about the rule of law and the pace of economic reforms.

Turkey remains highly dependent on imported oil and gas but is pursuing energy relationships with a broader set of international partners and taking steps to increase use of domestic energy sources including renewables, nuclear, and coal. The joint Turkish-Azerbaijani Trans-Anatolian Natural Gas Pipeline is moving forward to increase transport of Caspian gas to Turkey and Europe, and when completed will help diversify Turkey's sources of imported gas.

After Turkey experienced a severe financial crisis in 2001, Ankara adopted financial and fiscal reforms as part of an IMF program. The reforms strengthened the country's economic fundamentals and ushered in an era of strong growth, averaging more than 6% annually until 2008. An aggressive privatization program also reduced state involvement in basic industry, banking, transport, power generation, and communication. Global economic conditions and tighter fiscal policy caused GDP to contract in 2009, but Turkey's well-regulated financial markets and banking system helped the country weather the global financial crisis, and GDP growth rebounded to around 9% in 2010 and 2011, as exports and investment recovered following the crisis.

The growth of Turkish GDP since 2016 has revealed the persistent underlying imbalances in the Turkish economy. In particular, Turkey's large current account deficit means it must rely on external investment inflows to finance growth, leaving the economy vulnerable to destabilizing shifts in investor confidence. Other troublesome trends include rising unemployment and inflation, which increased in 2017, given the Turkish lira's continuing depreciation against the dollar. Although government debt remains low at about 30% of GDP, bank and corporate borrowing has almost tripled as a percent of GDP during the past decade, outpacing its emerging-market peers and prompting investor concerns about its long-term sustainability.

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
$2,371,374,000,000 (2019 est.)

$2,349,836,000,000 (2018 est.)

$2,282,304,000,000 (2017 est.)

note: data are in 2010 dollars
GDP - real growth rate-2.1% (2017 est.)

13.1% (2016 est.)

2.5% (2015 est.)
0.98% (2019 est.)

3.04% (2018 est.)

7.54% (2017 est.)
GDP - per capita (PPP)$10,881 (2019 est.)

$10,660 (2018 est.)

$10,972 (2017 est.)

note: data are in 2010 dollars
$28,424 (2019 est.)

$28,545 (2018 est.)

$28,141 (2017 est.)

note: data are in 2010 dollars
GDP - composition by sectoragriculture: 3.3% (2017 est.)

industry: 51% (2017 est.)

services: 45.8% (2017 est.)
agriculture: 6.8% (2017 est.)

industry: 32.3% (2017 est.)

services: 60.7% (2017 est.)
Population below poverty line23% (2014 est.)14.4% (2018 est.)
Household income or consumption by percentage sharelowest 10%: 3.6%

highest 10%: 25.7% (2007 est.)
lowest 10%: 2.1%

highest 10%: 30.3% (2008)
Inflation rate (consumer prices)-0.1% (2019 est.)

0.3% (2018 est.)

0.2% (2017 est.)
15.4% (2019 est.)

16.2% (2018 est.)

11.1% (2017 est.)
Labor force8.9 million (2010 est.)25.677 million (2020 est.)

note: this number is for the domestic labor force only; number does not include about 1.2 million Turks working abroad, nor refugees
Labor force - by occupationagriculture: 21.6%

industry: 18.7%

services: 59.8% (2008 est.)
agriculture: 18.4%

industry: 26.6%

services: 54.9% (2016)
Unemployment rate16% (2012 est.)

15% (2010 est.)
13.68% (2019 est.)

11% (2018 est.)
Distribution of family income - Gini index29.5 (2012 est.)41.9 (2018 est.)

43.6 (2003)
Budgetrevenues: 68.71 billion (2017 est.)

expenditures: 76.82 billion (2017 est.)
revenues: 172.8 billion (2017 est.)

expenditures: 185.8 billion (2017 est.)
Industriespetroleum, chemicals, textiles, leather, construction materials, food processing, fertilizer, metal fabrication/processingtextiles, food processing, automobiles, electronics, mining (coal, chromate, copper, boron), steel, petroleum, construction, lumber, paper
Industrial production growth rate0.7% (2017 est.)9.1% (2017 est.)
Agriculture - productswheat, barley, dates, tomatoes, rice, maize, grapes, potatoes, rice, watermelonsmilk, wheat, sugar beet, tomatoes, barley, maize, potatoes, grapes, watermelons, apples
Exports$61.4 billion (2017 est.)

$41.72 billion (2016 est.)
$310.671 billion (2019 est.)

$296.288 billion (2018 est.)

$271.866 billion (2017 est.)
Exports - commoditiescrude petroleum, refined petroleum, gold, dates, petroleum coke (2019)cars and vehicle parts, refined petroleum, delivery trucks, jewelry, clothing and apparel (2019)
Exports - partnersChina 26%, India 24%, South Korea 9%, United States 8%, Italy 6%, Greece 6% (2019)Germany 9%, United Kingdom 6%, Iraq 5%, Italy 5%, United States 5% (2019)
Imports$39.47 billion (2017 est.)

$19.57 billion (2016 est.)
$258.385 billion (2019 est.)

$272.933 billion (2018 est.)

$291.523 billion (2017 est.)
Imports - commoditiesrefined petroleum, broadcasting equipment, cars, jewelry, cigarettes (2019)gold, refined petroleum, crude petroleum, vehicle parts, scrap iron (2019)
Imports - partnersUnited Arab Emirates 28%, Turkey 21%, China 19% (2019)Germany 11%, China 9%, Russia 9%, United States 5%, Italy 5% (2019)
Debt - external$73.02 billion (31 December 2017 est.)

$64.16 billion (31 December 2016 est.)
$438.677 billion (2019 est.)

$454.251 billion (2018 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.)
Turkish liras (TRY) per US dollar -

7.81925 (2020 est.)

5.8149 (2019 est.)

5.28905 (2018 est.)

2.72 (2014 est.)

2.1885 (2013 est.)
Fiscal yearcalendar yearcalendar year
Public debt59.7% of GDP (2017 est.)

66% of GDP (2016 est.)
28.3% of GDP (2017 est.)

28.3% of GDP (2016 est.)
Reserves of foreign exchange and gold$48.88 billion (31 December 2017 est.)

$45.36 billion (31 December 2016 est.)
$107.7 billion (31 December 2017 est.)

$106.1 billion (31 December 2016 est.)
Current Account Balance$4.344 billion (2017 est.)

-$13.38 billion (2016 est.)
$8.561 billion (2019 est.)

-$20.745 billion (2018 est.)
GDP (official exchange rate)$231.994 billion (2019 est.)$760.028 billion (2019 est.)
Credit ratingsFitch rating: B- (2015)

Moody's rating: Caa1 (2017)

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

Moody's rating: B2 (2020)

Standard & Poors rating: B+ (2018)
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: 76.8 (2020)

Starting a Business score: 88.8 (2020)

Trading score: 91.6 (2020)

Enforcement score: 71.4 (2020)
Taxes and other revenues35.7% (of GDP) (2017 est.)20.3% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-4.2% (of GDP) (2017 est.)-1.5% (of GDP) (2017 est.)
Unemployment, youth ages 15-24total: 25.6%

male: 22%

female: 63.3% (2017)
total: 25.2%

male: 22.4%

female: 30.3% (2019 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: 59.1% (2017 est.)

government consumption: 14.5% (2017 est.)

investment in fixed capital: 29.8% (2017 est.)

investment in inventories: 1.1% (2017 est.)

exports of goods and services: 24.9% (2017 est.)

imports of goods and services: -29.4% (2017 est.)
Gross national saving13.3% of GDP (2019 est.)

20.6% of GDP (2018 est.)

18.9% of GDP (2017 est.)
26% of GDP (2019 est.)

27.7% of GDP (2018 est.)

26% of GDP (2017 est.)

Source: CIA Factbook