Iraq Country Risk Report

Published 26 August 2015 | Quarterly

  • 42 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
Iraq Country Risk Report

Core Views

  • Islamic State will be defeated over the course of the next twelve months, as Iraqi security forces (ISF) and its allies benefit from stronger coordination and international support. 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.

  • Stronger headline growth of the Iraqi economy in 2015 will result from accelerating oil exports. Conversely, 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.

Major Forecast Changes

  • Iraq's current account surplus will narrow significantly in 2015 as declining oil prices will hit the value of hydrocarbons exports. We forecast Iraq's current account to come in a deficit of 6.8% of GDP in 2015, from our previous forecast of a surplus of 4.5% of GDP and compared to surplus of 9.8% of GDP in 2014.

Key Risks To Outlook

  • Islamic State could prove more resilient in the north and west of the country and a protracted military engagement could drain Baghdad's resources.

  • Oil prices could again lower to the USD50/bbl level, jeopardising Baghdad's ability to maintain the subsidy system and its onerous public sector payroll.

Macroeconomic Forecasts (Iraq 2013-2016)
Indicator 2013 2014e 2015f 2016f
National Sources/BMI
Real GDP growth, % y-o-y 4.2 0.6 7.1 2.0
Nominal GDP, USDbn 195.7 199.8 215.6 225.1
Consumer price inflation, % y-o-y, eop 3.1 1.6 3.0 4.5
Exchange rate IQD/USD, eop 1,165.00 1,195.03 1,224.06 1,248.54
Budget balance, % of GDP 3.0 2.6 -7.9 -3.5
Current account balance, % of GDP 11.3 9.8 -6.6 -4.8
Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Political Outlook
Relations With Kurdistan To Worsen
TABLE: Political Table
Long-Term Political Outlook
Risks Of State Collapse - Scenarios Assessed
TABLE: Long-Term Sce nari os
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
Growth Picking Up From Very Low Base
TABLE: Economic Acti vit y
Fiscal Policy
Learning To Live With Fiscal Deficits
TABLE: Fiscal Polic y
Monetary Policy
Inflation To Head Higher
TABLE: Monetary Policy
Balance Of Payments
Reserves To Weather Balance Of Payments Storm
TABLE: Current Account
Islamic Finance
UAE To Cement Position As Regional Hub
Chapter 3: 10-Year Forecast
The Iraqi Economy to 2024
Success Story In Jeopardy
TABLE: Long-Term Macroeconomic Forecasts
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Operational Risk
TABLE: Operational Risk
Legal Environment
TABLE: Middle East and North Africa - Legal Risk
Costs Of Labour
TABLE: Middle East and North Africa - Labour Cost Risk
TABLE: Regulations Governing Flexibility of Workforce
Chapter 5: BMI Global Macro Outlook
Global Outlook
Emerging Markets Still Slowing
Table : Global Assumptions
Table : Developed States , Real GDP Growth , %
Table : Emerging Markets , Real GDP Growth, %

The Iraq Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Iraq. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Iraq's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.

Key Uses

  • Forecast the pace and stability of Iraq's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Iraq's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Iraq, including currency volatility, the commodity price boom and protectionist policies.

The Iraq Country Risk Report by BMI Research includes four three sections: Economic Outlook, Political Outlook and Operational Risk.

Economic Outlook:

How will the Iraq' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Iraq through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Iraq Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:


  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Iraq and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Iraq, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Iraq over the next 5-years?

BMI's Iraq country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Iraq Market - Political Strengths, Weaknesses, Opportunities and Threats facing Iraq.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Iraq's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Iraq’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Iraq's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Iraq?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Iraq against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Iraq’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

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