Exclusive: Iraq's economic outlook 2025 – optimism amid financial challenges, 23 DEC

 Exclusive: Iraq's economic outlook 2025 – optimism amid financial challenges

Shafaq News/ On Saturday, international economics expert Nawar Al-Saadi revealed future financial and economic expectations for Iraq as 2025 approaches.

Speaking to Shafaq News Agency, Al-Saadi stated, "The economic and financial outlook for Iraq at the beginning of the new year is a mix of optimism and caution, largely dependent on a set of economic, political, and regional factors that directly affect the country's financial and economic stability."

"International estimates indicate an improvement in Iraq's economic growth rates. According to reports from the International Monetary Fund, the Iraqi economy is expected to grow by 1.4% next year, with a projected increase to 5.3% in 2025.

 This growth reflects the economy's recovery after the challenges faced in recent years, particularly after the economic contraction of 2.2% in 2022. The economic growth will be mainly driven by the stability of oil prices and increased investments in non-oil sectors."

Al-Saadi pointed out that "there are concerns about the deterioration of the financial situation due to the expected budget deficit, which is anticipated to widen to 7.6% of GDP next year, compared to 1.3% this year. 

This deficit is attributed to fluctuations in oil prices, the primary source of government revenue, complicating the economic situation due to the heavy reliance on oil, which constitutes about 90% of Iraq's revenues. Any decline in global oil prices could lead to severe financial pressures on the government."

"Other challenges relate to inflation rates, which are expected to rise slightly to 3.5% in 2025. This increase reflects the impact of financial pressures and internal economic challenges, including rising prices of goods and services due to increased production and import costs," he continued, adding, "In terms of oil production, Iraq is expected to maintain a high production level, with plans to boost production capacity to around four million barrels per day by the first quarter of 2025. However, the success of these efforts will depend on political stability and relations with OPEC, as well as achieving long-term investments in energy infrastructure."

Al-Saadi noted, "In the banking sector, the government aims to implement structural reforms to improve the efficiency of the banking system and increase transparency. These reforms are part of a broader vision to develop the Iraqi economy and diversify income sources away from excessive reliance on oil."

Concluding, Al-Saadi highlighted that "Iraq may be heading towards significant economic and financial events. The main challenge lies in the government's ability to manage these challenges effectively through balanced financial and economic policies aimed at enhancing economic stability and diversifying the economy to achieve sustainable growth."