ERBIL, Kurdistan Region - The increase in oil prices and the easing of COVID-19 restrictions has led to a gradual recovery for Iraq’s economy, according to the World Bank’s April update regarding Iraq’s economy, which projects an overall GDP growth of 8.9 percent in the year 2022.
The rise of the coronavirus pandemic accompanied by the drastic fall in oil prices and a case of political deadlock led to a significant economic downfall for Iraq in 2020, which recorded a negative 8.6 percent GDP growth in that year.
A new report from the World Bank states that Iraq has gradually recovered from the recession of 2020, citing more reliance on non-oil economic activities and better oil market dynamics as reasoning. According to the report, in addition to the global surge in oil prices, oil production has also increased in Iraq due to the OPEC+ production quota tapering.
The Organization of the Petroleum Exporting Countries (OPEC) was founded by five states, Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, and has now grown to 13 members. The group controls more than half the world’s oil reserves and has a major influence on global oil prices.
OPEC+ is an alliance formed between members of OPEC along with non-member countries that export crude oil.
“Higher projected oil prices in 2022-2024 are forecast to significantly improve Iraq’s fiscal and external outlook,” the report added.
Iraq scored its highest oil revenue since 1972 during March, bringing in a gross amount of $11.07 billion, with an average of 110.090 dollars per barrel.
The report highlighted the non-oil sector - mainly transport, accommodation, and retail sectors - for the economic rebound, reporting that this sector grew by 6 percent in the first nine months of 2021.
The report also addressed the impact of severe heat and drought on the agricultural sector in Iraq, stating that they have led to a decrease in agricultural production, and have made the country more reliant on imports, as concerns over food security in some parts of the country continue to grow. “Further intensified climate change effects and water shortages will decrease agricultural production,” it warned.
Representative from the United Nations’ (UN) Food and Agriculture Organization (FAO) Salah al-Hajj told Rudaw on Wednesday that the rate of crop failure is expected to increase in Iraq as a result of the lack of rain, and increase in drought, specifically in the Nineveh province.
The report projected a GDP growth of 4.5 percent and an inflation rate of 3 percent for the year 2023 in Iraq.
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