Iraq Growth Update
According to analysis by the IMF and other international organisations and private commentators — Iraq may be expected to enjoy GDP growth in excess of 10% during 2013.
Since the drawdown of American troops from Iraq just over a year ago, the country has experienced much greater stability than had been expected. Strong oil prices and strong foreign investment from Gulf states and Western oil firms have served the economy very well. Oil, retail and construction have continued to drive growth in the post-conflict period.
The recent $1.35 billion sale of shares in Iraqi mobile telephone firm Asiacell TASC.ISX, the country’s first major public offer of equity since the U.S.-led invasion in 2003 should also help lure liquidity and foreign investment to the bourse, according to the head of Iraq’s Stock Exchange. The IPO, which closed on 2 February was fully subscribed, with foreign investors purchasing 70 percent of the offering.
Nonetheless, Iraq still has serious challenges to address. Violence and civil unrest remain a problem, corruption and overregulation continue to strangle private sector development and private sector employment continues to lag as a result. Even so, with oil production in 2012 hitting a 30 year high, the country is on pace to rate as one of the top-5 fastest growing economies in the world next year.
Another key area to watch will be the ongoing tensions between the Iraqi central government and that of the semi-autonomous Kurdish Region to the North. At present, Exxon and other prominent oil producers are facing significant pressure to take sides. Revenue sharing and control of oil and gas policy are the two most salient friction points in a larger dispute between Baghdad and the Kurdish Regional Government on broad questions of autonomy.
Australian firms exporting food products, security services, building materials and consumer goods would do well to note this rapidly growing market has shown a real interest in trade and investment with our part of the world.
Contributors, Robert Rowland and Cynthia Dearin.