Formerly part of the Ottoman Empire, Iraq was occupied by the United Kingdom during the course of World War I; in 1920, it was declared a League of Nations mandate under UK administration. In stages over the next dozen years, Iraq attained its independence as a kingdom in 1932. A "republic" was proclaimed in 1958, but in actuality a series of strongmen ruled the country until 2003. The last was SADDAM Husayn from 1979 to 2003. Territorial disputes with Iran led to an inconclusive and costly eight-year war (1980-88). In August 1990, Iraq seized Kuwait but was expelled by US-led UN coalition forces during the Gulf War of January-February 1991. Following Kuwait's liberation, the UN Security Council (UNSC) required Iraq to scrap all weapons of mass destruction and long-range missiles and to allow UN verification inspections. Continued Iraqi noncompliance with UNSC resolutions over a period of 12 years led to the US-led invasion of Iraq in March 2003 and the ouster of the SADDAM Husayn regime. US forces remained in Iraq under a UNSC mandate through 2009 and under a bilateral security agreement thereafter, helping to provide security and to train and mentor Iraqi security forces.
Middle East, bordering the Persian Gulf, between Iran and Kuwait
petroleum, natural gas, phosphates, sulfur
Population - distribution
population is concentrated in the north, center, and eastern parts of the country, with many of the larger urban agglomerations found along extensive parts of the Tigris and Euphrates Rivers; much of the western and southern areas are either lightly populated or uninhabited
Arabic (official), Kurdish (official), Turkmen (a Turkish dialect), Syriac (Neo-Aramaic), and Armenian are official in areas where native speakers of these languages constitute a majority of the population)
BAGHDAD (capital) 6.643 million; Mosul 1.694 million; Erbil 1.166 million; Basra 1.019 million; As Sulaymaniyah 1.004 million; Najaf 889,000 (2015)
- Conventional long form
- Republic of Iraq
- Conventional short form
- Local long form
- Jumhuriyat al-Iraq/Komar-i Eraq
- Local short form
- Al Iraq/Eraq
federal parliamentary republic
- Geographic coordinates
- 33 20 N, 44 24 E
- Time difference
- UTC+3 (8 hours ahead of Washington, DC, during Standard Time)
has not submitted an ICJ jurisdiction declaration; non-party state to the ICCt
Iraq's GDP grew by more than 10% in 2016, the best performance in the past decade, because of rising oil prices, a significant driver of Iraqi GDP. During 2016, security and financial stability throughout Iraq began to improve as Iraqi Security Forces made gains against the ongoing insurgency and oil prices slowly rose. The Iraqi Government entered into a Stand-By Arrangement (SBA) with the IMF in July 2016, which helped stabilize its finances by encouraging improved fiscal management, needed economic reform, and expenditure reduction. Iraq passed its first SBA review in December 2016, and additional progress on the program is critical to its long-term fiscal health. Diversification efforts – a key component to Iraq’s long-term economic development – require a strengthened investment climate to bolster private-sector engagement. Sustained improvements in the overall standard of living depend heavily on global oil prices, the central government passage of major policy reforms, and progress in the conflict with ISIL.
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ 4,121,300,000
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 67,321,423,689
- Exports of goods and services
- US$ 55,834,830,626
- Total Merchandise Trade
- FDI, net inflows
- US$ 3,316,300,000
- Commercial Service Exports
- US$ 6,141,900,000
wheat, barley, rice, vegetables, dates, cotton; cattle, sheep, poultry
petroleum, chemicals, textiles, leather, construction materials, food processing, fertilizer, metal fabrication/processing
- crude oil 99%, crude materials excluding fuels, food, live animals
- China 22.8%, India 20.4%, South Korea 11.3%, US 7.8%, Italy 6.7%, Greece 6.1% (2015)
- food, medicine, manufactures
- Turkey 20.3%, Syria 19.2%, China 18.8%, US 4.7%, Russia 4.3% (2015)
- Country Risk Rating
- The highest-risk political and economic situation and the most difficult business environment. Corporate default is likely.
- Business Climate Rating
- The highest possible risk in terms of business climate. Due to a lack of available financial information and an unpredictable legal system, doing business in this country is extremely difficult.
- Fifth largest proven crude oil reserves in the world
- Significant political tensions between different ethnic and religious minorities and the Shiite majority in power
- Risk of a split from autonomous Kurdistan, an important contributor to the oil sector
- Cost of reconstruction following the armed conflict weighing on government finances
- Low weight of the private non-hydrocarbon sector in GDP
The Iraqi economy remains firmly centred around the oil and gas sector which accounts for more than 50% of GDP and 90% of the country’s industrial activity. Despite the continuing conflict with ISIS in its western provinces, oil production increased by 20% in 2016, the fastest since 2004. Average oil production reached 4.3 M bpd with 3.3 M bpd from the southern oilfields and 0.45 M bpd from Kurdistan. The introduction of two authorised oil grades for export (Basra Heavy and Basra Light blend label) and reactivation of a number of pipelines (connection of the northern oilfields to the pipeline linking Kurdistan and Turkey) allowed an increase in exported volume. Moreover, the levels of oil and gas prices had very little impact on the sector as the average cost of production was lower than the price per barrel in 2016 and major investments had been made before the oil price slump. However, oil production growth should be limited in 2017as production is expected to stabilise at 4.3 M bpd according to the Vienna Agreement set the 30 November 2016 by OPEC members. The increase in oil and gas output has masked the continuing contraction in the non-oil economy which continues to suffer from internal conflict spill over. Infrastructures’ destruction in battle area , population displacement from the war-ravaged regions, as well as multiple terror attacks in the capital Bagdad, are undermining economic activity. The recapture of Mosul could however be the green light to renewed reconstruction efforts. Any reconstruction work could however be limited by the critical state of the public finances at the federal level. A support program from the International Monetary Fund was launched in 2016 and should cover the period 2016-2019. An amount of US$ 5.4 Bn, with an initial release of US$ 1.24 Bn in July, will help provide relief for the country’s public finances.
With 80% of budget revenues from the oil and gas sector, the slump of oil and gas prices in 2016 weakened public finances. Indeed, despite the growth in production, the fall in prices automatically resulted in reduced budget revenues of 40% at a time where the state is facing an increase in its military expenditure. Oil prices recovery, coupled with higher level of production expected for 2017 (4.4 M bpd) should help budget consolidation and reducing the public deficit. The government also needs to cut subsidies and hold down state employee wages (the public sector accounts for almost 60% of jobs). Investment spending, in particular on infrastructure, will also be greatly reduced. Budget cuts are not expected to include social assistance provided for refugees as well as those displaced by the conflict. The public debt increased further in 2016 because of the scale of the public deficit and cannot be sustained.
Looking at the external accounts, the current account balance deficit widened in 2016 but contract in 2017. Iraqi exports should benefits from the slow rise in prices in 2017. Nevertheless, this effect could be less beneficial than hoped if Iraq comes within the production quotas set for 2017 by OPEC.
The Iraqi security situation became extremely acute with the conquest of part of the country by Islamic State (IS). This conflict altered the balance of power and split the country into those areas held by IS, the autonomous Kurdish areas and those controlled by the federal government. The recapture of Mosul could mark the beginning of the end of this war but Iraq could emerge more divided. There are more than 4 million refugees and displaced persons. The military successes of the Iraqi army do not preclude the emergence of tensions in other areas with religious or ethnic minority groups controlling certain regions. Beyond the conflict itself, Iraq is going through a period of acute political instability. The removal of a number of Sunni ministers from the government on the grounds of corruption has revived ethnic and religious rivalries. Relations with Kurdistan remain tense and the role played by Kurdish forces in liberating part of the country has bolstered the negotiating position of the autonomous region.