BY:Shatha kalel
The Iraqi economy is witnessing significant transformations aimed at achieving economic diversification, reducing reliance on oil, and strengthening other productive sectors. These shifts are essential given global fluctuations in energy prices and inflationary pressures. Developing non-oil sectors and improving public resource management are key to achieving sustainable growth and ensuring citizens’ well-being.
Current Economic Situation
Iraq recorded a 5% growth in non-oil GDP in 2024, driven by improvements in the agricultural sector and increased public spending. The fiscal deficit reached about 5 trillion dinars, equivalent to 1.5% of GDP, a low level that does not pose a threat to public debt according to IMF estimates.
The government is working on restructuring state-owned banks to improve their capacity to absorb government financing tools and stimulate the local market, in addition to appointing new staff to activate the public debt management system and analyze financial performance. The IMF mission has also expressed readiness to provide technical and advisory support in tax reform and public debt management, ensuring the adoption of best global practices and enhancing financial efficiency.
Shift Toward Sustainable Energy
The Iraqi government’s move toward renewable energy reflects a commitment to economic and environmental sustainability. A plan has been launched to convert 6,000 government buildings to operate on solar power, reducing reliance on oil and enabling more effective use of natural resources. This direction supports economic diversification goals and strengthens Iraq’s ability to withstand global energy market fluctuations.
Economic Analysis
The growth in non-oil GDP reflects Iraq’s ability to achieve comprehensive and balanced development, reducing the economy’s vulnerability to oil price volatility. The low fiscal deficit provides the state with financial space to expand development and infrastructure projects without significantly increasing public debt.
Restructuring banks and activating public debt management represent strategic tools to enhance domestic financing and stimulate private investment, while cooperation with the IMF supports financial reforms and ensures efficiency in managing public resources. Investment in solar energy contributes to reducing oil dependence and promoting long-term economic sustainability.
Iraq’s Economic Outlook
Projections indicate continued growth of around 4% in 2025, supported by improved agricultural performance and carefully planned government spending. However, the Iraqi economy remains exposed to several variables:
Fluctuations in global oil prices and their impact on public revenues.
Political and security stability, a key factor for attracting investments.
The success of fiscal and tax reforms to ensure social justice and efficient resource distribution.
Expansion of renewable energy projects to ensure economic and environmental sustainability.
Conclusion
Economic indicators show that Iraq is making positive strides toward economic diversification and sustainable growth, with a clear ability to withstand oil price fluctuations and strengthen non-oil sectors. Financial reforms, banking restructuring, and the focus on renewable energy reflect the government’s commitment to achieving effective and sustainable management of public resources.
If these variables are prioritized and economic and reform policies are effectively implemented, Iraq can achieve balanced and sustainable economic growth, enhance the state’s ability to provide better services to citizens, and ensure social justice and long-term financial stability.
Economic Studies Unit / North America Office
Al-Rabetat Center for Research and Strategic Studies