Islamic State will remain well entrenched over the coming year, and Iraqi security forces (ISF) and its allies will focus on re-conquering the Anbar province and Mosul. Iraq will maintain formal unity within a fragile federalised state over the coming decade, with the Kurdish region retaining significant autonomy but not outright independence.
Iraq will remain in recession over 2016. Domestic expansion will be sluggish and uneven; consumer spending and capital formation will be hit hard by political instability, and declining oil prices will hinder the government's ability to prop up spending.
Sectarian tensions could increase even higher if Baghdad fails to reconstruct the Sunni territory it re-conquers from IS.
PM Haider al-Abadi could lose his party's support, resulting in his impeachment. This would further increase political instability, with political parties attempting to gain more power.
|e/f = BMI estimate/forecast. Source: National Sources, BMI|
|Real GDP growth, % y-o-y||-3.9||-0.7||-0.3||2.0|
|Nominal GDP, USDbn||204.0||165.5||145.7||170.3|
|Consumer price inflation, % y-o-y, eop||1.6||2.3||7.0||5.5|
|Exchange rate IQD/USD, eop||1,195.03||1,182.00||1,280.51||1,296.54|
|Budget balance, % of GDP||-5.7||-18.5||-19.3||-10.3|
|Current account balance, % of GDP||12.0||-6.8||-14.1||-7.6|
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