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Country Guide > Middle East > Iraq | |
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Business Profile Economy With proven deposits of over 110 billion barrels – about 10 per cent of the total – Iraq has the world’s second-largest oil reserves. Oil income drove Iraq’s rapid post-war development until the end of the 1970s. However, the Iran-Iraq war, which lasted from 1980 until 1988, brought Iraq’s growth to a halt. Now Iraq's US-led occupation has formerly ended and the transferral of power to a new Iraqi government has been instigated, perhaps a glimmer of economic optimism can be permitted, although the situation remains perilous and eminently unstable. As reconstruction progresses, the country’s economic momentum should recover, although the scale of destruction and dilapidation is such that this continues to be a lengthy process. The agricultural sector by contrast fared relatively well, at least during the early sanctions period as Iraq sought to grow more food in order to compensate for the absence of imported produce. However, light industry, which the government originally promoted as part of an import substitution programme, operated far below the levels of the 1980s. The all-important oil industry meanwhile was constrained by limits imposed by the UN sanctions. But gradually the Iraqis developed an extensive network of smuggling routes and ‘illicit’ markets; indeed, the scale of these was such that by 2001, the Iraqis announced that they were no longer prepared to abide by the agreement with the UN and withdrew entirely from the international market. But there was no disguising the decline which the Iraqi economy had undergone, especially during the previous 10 years. Accurate figures about the Iraqi economy are inevitably hard to come by. There were several bouts of hyperinflation during the 1990s, and the Iraqi dinar lost 90 per cent of its value during the decade. The economy contracted at an estimated average annual rate of 5 per cent during the same period. In 2002, inflation was 70 per cent, and the economy contracted by 6.5 per cent. Iraq also has a vast external debt in the region of US$200 billion, the majority of which is owed to Kuwait and Saudi Arabia. Hopes that the economy might grow in 2003 were dashed by both the extent of the rehabilitation needed by the oil industry and the consequences of the US-led war against Iraq. GDP in 2004 was 21.8 per cent and inflation was 29.3 per cent. However, the rebuilding of oil, electricity and other production sources is proceeding effectively. International donors have already pledged more than $50 billion towards rebuilding Iraq. Business Formal courtesies are common and expected. Visiting cards are regularly exchanged and these are often printed in Arabic and English. Meetings may not always be on a person-to-person basis and it is often difficult to confine items to the business in progress as many topics may be discussed in order to assess the character of colleagues or traders. Office hours: Sat-Wed 0800-1400; Thurs 0800-1300. Friday is the weekly day of rest when offices tend to be closed. Commercial Information For information or advice contact the Federation of Iraqi Chambers of Commerce, PO Box 11348, Mustansir Street, Baghdad (tel: (1) 888 8850; fax: (1) 888 2305) or the Baghdad Chamber of Commerce, PO Box 24168 Almsarif, Baghdad Almustansir Street, Baghdad (tel: (1) 887 6211/1; fax: (1) 887 9563). |