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publication April 16, 2018

Iraq's Economic Outlook - April 2018

Iraq’s growth outlook is expected to improve thanks to a more favorable security environment and the gradual pickup of investment for reconstruction. Overall GDP growth is projected to return to a positive 2.5% in 2018 despite the extension of the OPEC+ agreement till end-2018, and it will further increase in 2019 as the agreement expires. From 2020, oil production is expected to increase only marginally, reducing overall economic growth, as the Government of Iraq (GoI) cannot afford to significantly increase investments in the oil sector.

The poverty rate increased from 18.9% in 2012 to an estimated 22.5% in 2014. Recent labor market statistics suggest further deterioration of the poverty situation. Labor force participation rate of youth (ages 15-24) has dropped markedly since the onset of the crisis in 2014, from 32.5 % to 27.4%.

Unemployment increased particularly for individuals from the poorest households, youth, and those in the prime working age (ages 25-49). The unemployment rate is about twice as high in the governorates most affected by ISIS-related violence and displacement compared to the rest of the country (21.1% versus 11.2%), especially among the young and the uneducated.