A Look at the Iraqi Economy

Iraq is in the news daily, yet most of us know relatively little about its economy. This article provides a short economic profile to help fill this void. Reliable economic data about Iraq are hard to come by, forcing economic researchers, political analysts and business strategists to rely on estimates.

Iraq has an estimated population of 24 million people. The country's population is growing at a 2.8 percent average annual rate.

Historically, 95 percent of the nation's foreign currency earnings have come from oil. The CIA World Factbook estimates Iraq's purchasing power parity (proxy for GDP) in 2001 at just under $60 billion. Real GDP is believed to have dropped by 5.7 percent in 2001. Pakistan, Chile and the Czech Republic have comparably sized economies.

In addition to oil, Iraq's other leading industries are: chemicals, textiles, construction materials, food processing. Obviously, defense consumes a large part of the Iraqi government's budget and has a disproportionate impact on the country's economic life.

In 2001, Iraq had estimated exports of about $16 billion--46 percent of which was oil sold to the U.S. Three other countries--Italy, France and Spain--account for a significant share of Iraq's exports. Iraq had estimated imports valued at $11 billion in 2001; with food, medicine and manufactures accounting for most of this total.

Iraq had an almost exclusively agricultural economy until the 1950s. Economic development was strong until 1980's when Iraq began to encounter a series of military conflicts that setback economic growth in a major way.

Iraq’s real gross domestic product (GDP)—that is, its GDP adjusted for inflation—is believed to have fallen by 75 percent from 1991 to 1999. In the late 1990s the country’s real GDP was estimated at about what it was in the 1940s.

The Economist Intelligence Unit believes that it is probable that the regime of the Iraqi president, Saddam Hussein, will be overthrown in 2003, and that the US-led war is likely to begin by April at the latest. These developments could trigger a 5 percent contraction in the Iraqi economy in 2003. It is believed that the regime of Saddam Hussein will try to maximize revenue by illicit trading in oil to keep the country's economy alive.

Hopefully this short profile helps to fill the void for economic information about Iraq.