Iraqi Economy
Economy - overview: During 2014, worsening security and financial stability throughout Iraq - driven by an ongoing insurgency, decreasing oil prices, and political upheaval - decreased the prospects for improving the country's economic environment and securing much-needed foreign investment. Long-term fiscal health, a strengthened investment climate, and sustained improvements in the overall standard of living still depend on the central government passing major policy reforms. 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 2014 remained relatively flat at 2.4 million barrels per day on average, despite new production coming online at the West Qurna 2 and Badrah oilfields, because repeated attacks on the Iraq-Turkey pipeline reduced export capacity. During the second half of 2014, government revenues decreased as global oil prices fell by more than 30%. 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. The Iraqi Kurdistan Region's (IKR) autonomous Kurdistan Regional Government (KRG) passed its own oil law in 2007, and has directly signed about 50 contracts to develop IKR energy reserves. The federal government has disputed the legal authority of the KRG to conclude most of these contracts, some of which are also in areas with unresolved administrative boundaries in dispute between the federal and regional government. In December, the federal government and the KRG agreed to sell oil exports from Kurdish-controlled oil fields under the federal oil ministry, in exchange for the central government paying $1 billion to the Kurdish Peshmerga forces and resuming budget transfers to the KRG that amount to 17% of Iraq's national budget. 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 Rampant corruption, outdated infrastructure, insufficient essential services, skilled labor shortages, and antiquated commercial laws stifle investment and continue to constrain growth of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): $522.7 billion (2014 est.)
GDP (official exchange rate): $221.1 billion (2014 est.)
GDP - real growth rate: -2.4% (2014 est.)
GDP - per capita (PPP): $14,600 (2014 est.)
GDP - composition by sector: agriculture: 3.3%
industry: 64.5%
services: 32.2% (2014 est.)
Labor force: 8.95 million (2010 est.)
Labor force - by occupation: agriculture: 21.6% NA%
industry: 18.7% NA%
services: 59.8% NA% (2008 est.)
Unemployment rate: 16% (2012 est.)
Household income or consumption by percentage share: lowest 10%: 3.6%
highest 10%: 25.7% (2007 est.)
Budget: revenues: $101.4 billion
expenditures: $94.58 billion (2014 est.)
Inflation rate (consumer prices): 6.1% (2012 est.)
Central bank discount rate: 6% (December 2012)
Commercial bank prime lending rate: 6% (31 December 2014 est.)
Agriculture - products: wheat, barley, rice, vegetables, dates, cotton; cattle, sheep, poultry
Industries: petroleum, chemicals, textiles, leather, construction materials, food processing, fertilizer, metal fabrication/processing
Industrial production growth rate: 6.4% (2014 est.)
Electricity - production: 62.3 billion kWh (2013 est.)
Electricity - consumption: 53.41 billion kWh (2013 est.)
Electricity - exports: 0 kWh (2013 est.)
Electricity - imports: 8.201 billion kWh (2013 est.)
Oil - production: 3.066 million bbl/day (2013 est.)
Oil - consumption: 500,000 bbl/day (2008 est.)
Oil - exports: 2.39 million bbl/day (2013 est.)
Oil - imports: 0 bbl/day (2013 est.)
Oil - proved reserves: 140.3 billion bbl (1 January 2014 est.)
Natural gas - production: 646 million cu m (2012 est.)
Natural gas - consumption: 646 million cu m (2012 est.)
Natural gas - exports: 0 cu m (2012 est.)
Natural gas - imports: 0 cu m (2012 est.)
Natural gas - proved reserves: 3.158 trillion cu m (1 January 2014 est.)
Current account balance: -$7.748 billion (2014 est.)
Exports: $94.43 billion (2014 est.)
Exports - commodities: crude oil 84%, crude materials excluding fuels 8%, food and live animals
Exports - partners: China 23.8%, India 18.4%, US 15.7%, South Korea 7.7%, Greece 5.9%, Italy 4.9% (2014)
Imports: $62.34 billion (2014 est.)
Imports - commodities: food, medicine, manufactures
Imports - partners: Turkey 23.3%, Syria 17.3%, China 16.6%, US 4.5% (2014)
Reserves of foreign exchange and gold: $74 billion (31 December 2014 est.)
Debt - external: $58.19 billion (31 December 2014 est.)
Exchange rates: Iraqi dinars (IQD) per US dollar - 1,166 (2014 est.), 1,166 (2013 est.), 1,166.17 (2012 est.), 1,170 (2011 est.), 1,170 (2010 est.)
economic climate  
Background: The Iraqi economy has long depended on oil exports to sustain the nation. Various estimates indicate that Iraq has approximately 112 billion barrels of oil that, if accurately proven, would constitute the second largest reserve in the world after Saudi Arabia. Existing oil fields are widely dispersed with fields in the South of the country currently producing the highest output.
Iraq has significant gas reserves, predominately found in conjunction with oil and unfortunately due to the lack of infrastructure largely flared rather than re-injected. Significant gas reserves remain untapped. These gas reserves could either be liquefied for export or used to provide a significant and sustainable energy source for electricity production, which in turn could drive new domestic manufacturing industries. This would also potentially free up more crude or refined oil for export.
Agriculture has historically been of great economic importance for Iraq. Livestock including cattle, sheep, goats and poultry are important industries with training in farm management, animal husbandry and pasture improvement required to help build productive and sustainable sectors. Modernising the agriculture sector will be crucial in developing a diversified economy.
In 2008, Iraq approved a reconstruction budget totalling $48 billion. Iraq’s economic prospects have improved. Increased security has boosted domestic demand and allowed sustained oil exports from the Kirkuk oilfields.
Export opportunities:  
Update: This page was last updated on 10 November 2015
Sources: 1. CIA, The World Factbook, https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html
2. http://www.austrade.gov.au
3. DIBNC Experts Team