Despite being one of the most politically unstable countries in the world, Iraq is considered among the world's fastest growing economies. According to IMF, Iraq has one of the fastest projected economic growth among emerging markets with a 2013 GDP of $220 billion forecasted to grow at 6-9% over the next couple of years, as well Iraq has one of the highest budgets of $120 billion in 2013. The country’s debt to GDP ratio is also dropping rapidly, from 183% in 2009 to 35% in 2011. By 2014, this is expected to drop to 12%.
Historically, Iraq’s economy has been characterised by heavy dependence on oil exports, however, Iraq today benefits from a diverse economy with multiple economic industries that are driving the country’s strong potential: Services account for 31.7% of the economy, 3.4% from agriculture, and industrial production accounts for 64.9% of GDP.
Along this strong economic growth, Iraq's government has managed to maintain stable prices and control the economic growth. The country is also managing to attract billions in investment from multinationals through a fair system of taxation and an environment of investor protections, particularly in its oil & gas industry. FDI grew by 40% in 2011 reaching $55.67bn. More than 27% of this amount was directed in the oil rich southern province of Basra, followed by Baghdad with 19.9% and the Kurdistan Region with 14.5%. While the oil and gas sector accounted for 23% of FDI, the top sector for investment was real estate. According to the Construction and Housing Ministry and Planning Ministry there is a nationwide deficit of 4 million housing units.
Nonetheless, Iraq economy still has challenges. The country is still suffering from a difficult economic transition from a command to a market economy. Its legal and regulatory frameworks are underdeveloped and, importantly, companies cannot demonstrate a track record of credit worthiness. Moreover, due to decades of war, corruption, and government oppression, industries in Iraq are underdeveloped and are in desperate need for foreign firms to bring know-hows, technology, and intellectual property to assist in reviving their industries. Currently Iraq sectors are immature and requires ongoing development to reach global standards, providing opportunities for foreign firms to move and help grow local businesses and industries.
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