2013-12-08 16:20:36 - New Country Reports research report from Business Monitor International is now available from Fast Market Research
Despite the formation of a government in December 2010, we ex -pect political progress to remain slow and stability fragile. A broken power-sharing agreement and persistent sectarian tensions present key risks.
The Iraqi economy will be among the fastest growing in the world over the coming five years, driven by an aggressive increase in oil production and the start of large-scale infrastructure projects.
Major Forecast changes
We have revised down our forecasts for real GDP growth, and project the economy to expand 10.6% and 9.2% in 2013 and 2014, respectively, compared to our previous forecast of 10.5% in 2013 and 10.7% in 2014. This largely result from BMi's Oil & Gas research team's more conservative outlook on oil exports, resulting from persisting security
risks and an outdated infrastructure, coupled with low exports from the semi-autonomous Kurdistan region. With political instability increasing, risks to the economic outlook remain to the downside.
Key risks to outlook
Full Report Details at
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Attacks on oil infrastructure due to terrorism or acts of political protest present downside risks to our growth forecasts.
A breakdown of the coalition government could lead to a period of pronounced instability and slower growth.
Report Table of Contents:
Major Forecast changes
Key risks to outlook
chapter 1: political outlook
BMi political risk ratings
political risks remaining elevated in 2014
- The level of political violence in Iraq continues to increase. In addition, political divisions over the adoption of a new electoral law could cause delays in parliamentary elections, which are scheduled for April 2014. We reaffirm our view that the country's political blocs will reach some form of agreement which will avoid the descent into outright civil war. We cannot however preclude a further uptick in violence or an eventual partition of the country along sectarian lines.
TAB lE: POlITICA l OvErvIEW
Long- term political outlook
Multiple challenges to stability over the coming Decade
- Iraq faces multiple challenges to its stability over the coming decade, and we do not preclude a return to authoritarian rule, renewed sectarian conflict or the break-up of the state. The key to maintaining stability is ensuring that Iraq's separate ethnic groups' interests are protected by the federal government. Even if Iraq avoids these negative scenarios, the country is likely to remain politically fragmented for the foreseeable future, although this would not necessarily preclude an economic revival.
chapter 2: economic outlook
BMi economic risk ratings
Growth robust Despite increasing instability
- We forecast Iraq's economy to expand by 10.6 % and 9.2 % in real terms in 2013 and 2014, respectively. Private consumption and oil exports will remain the main growth drivers over the coming years. That said, risks to these forecasts lie firmly to the downside as a result of increasing levels of political violence.
taBle: econoMic actiVity
taBle: fiscal P olicy
expansionary Fiscal policy in 2014
- We project Iraq's fiscal account to come in surplus of 1.9% and 1.8% of GDP in 2014 and 2015, respectively. Current expenditure will increase at a rapid pace, while the expansion of CAPEX will be constrained by low budget execution rates.
taBLe: M onetarY poLicY
Inflation Accelerating In 2014
- We project consumer price inflation (CPI) in Iraq increasing by 1.8% in 2013 and 4.4% in 2014. low base effects, accelerating housing inflation and the government expansionary policy stance will ensure that the headline inflation print will accelerate over the coming quarters.
chapter 3: 10-Year Forecast
the iraqi economy to 2022
continued Growth Dependent on Maintaining stability
- Our 10-year macroeconomic forecasts are based on the expectation that Iraq will become an increasingly stable polity, setting the foundation for average real GDP growth of 7.3% between 2013 and 2022. The oil and gas sector will continue to be the lifeblood of the economy over this time frame.
taBLe: LonG-terM Macroecono Mic Forecasts
chapter 4: Business environment
BMi Business environment risk ratings
Business environment outlook
taBLe: BMi Business anD operation risK ratinGs
taBLe: BMi L eGaL FraMeWorK ratinG
taBLe: LaBour F orce QuaLit Y
taBLe: M ena - annuaL FDi inFLoWs
taBLe: traDe anD inVest Ment ratinGs
taBLe: top export Destinations (us$Mn)
chapter 5: BMi Global assumptions
unchanged outlook, But Headline risks remain
taBLe: GLoBaL assuMptions
taBLe: DeVeLopeD states, reaL GD p Gro WtH, %
taBLe: BM i V ersus BL ooMBerG consensus reaL GDp GroWtH Forecasts, %
taBLe: eMerGinG Mar Kets, reaL GD p Gro WtH, %
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