Iraq’s GDP

Iraq has the third largest oil reserves in the world. It has an estimated 115 billion barrels, placing it only behind Saudi Arabia and Iran. Petroleum accounts for 65% of Gross Domestic Product (GDP). Iraq has also been the recipient of $125 billion in reconstruction aid, along with reducing half of its debt. With all this potential wealth the country should be well off. Instead, it finds itself near the median point when comparing GDPs to other countries in the region, and almost at the bottom in per capita GDP in the Middle East.

In the 1980s Iraq was a growing middle class country, but fell into disrepair in the proceeding decades. After the 1991 Gulf War the economy collapsed under international sanctions. It became poor and underdeveloped on par with countries in Africa. 60% of the population for example was dependent upon the state-run food ration system, and there was widespread malnutrition. In 2002 the GDP was at $20.5 billion, and per capita GDP stood at $802. That was a 7.8% decrease from the previous year. The 2003 U.S. invasion was another setback, dropping GDP to $13.6 billion, and per capita GDP to $518. Since then Iraq has had steady growth, largely due to the increase in the price of oil, which accounts for 90% of revenues and 65% of the GDP. By 2008 GDP was at an estimated $84.7 billion, and per capita GDP at $3,100. That was a $29.3 billion increase from the previous year.

Iraq’s GDP/Per Capita GDP
2002 $20.5 billion/$802
2003 $13.6 billion/$518
2004 $25.7 billion/$949
2005 $34.5 billion/$1,237
2006 $48.5 billion/$1,687
2007 $55.4 billion/$1,978
2008 $84.7 billion/$3,100

Breakdown of Iraq’s GDP – est. 2008
65% Oil
13% Services
7% Transportation/Communication
6% Wholesale, Retail, Hotels
5% Farming
2% Manufacturing
1% Finance/Banking
1% Construction

In early 2009 Iraq’s Planning Ministry expected the GDP to continue to grow by 10.9%, but that’s hard to believe with the collapse of the petroleum market. The Pentagon predicts that there could still be positive growth in 2009 due to government spending, but even that is going to be constrained with the budget cuts.

Despite the expansion of the economy after the U.S. invasion, Iraq has not regained the standard of living that it had in the 1980s. When comparing GDPs in the region Iraq ranked 9th out of seventeen countries in 2008. Saudi Arabia at $468.1 billion, Iran at $319 billion, and the United Arab Emirates with $240.3 billion were at the top, while Bahrain at $18.6 billion, Jordan at $20.1 billion, and Yemen at $22.3 billion were the bottom three. When broken down by per capita the comparison was even more stark. Iraq was second to last with only Yemen below it. Qatar, Kuwait, and the United Arab Emirates were the richest in the region.

Comparison Of Iraq’s GDP With Other Countries In The Region
Saudi Arabia $468.1 billion
Iran $319 billion
United Arab Emirates $240.3 billion
Egypt $159.2 billion
Algeria $152.3 billion
Kuwait $148.4 billion
Qatar $95.8 billion
Morocco $87 billion
Iraq $84.7 billion
Libya $67.9 billion
Syria $50 billion
Oman $46.4 billion
Tunisia $38.9 billion
Lebanon $28.02 billion
Yemen $22.3 billion
Jordan $20.1 billion
Bahrain $18.6 billion

Comparison Of Iraq’s Per Capita GDP With Other Countries In The Region
Qatar $58,004
Kuwait $40,826
United Arab Emirates $29,063
Saudi Arabia $23,928
Bahrain $23,702
Oman $23,654
Libya $16,431
Iran $11,748
Lebanon $10,742
Algeria $8,344
Tunisia $7,894
Egypt $5,689
Jordan $5,051
Syria $4,763
Morocco $4,405
Iraq $3,880
Yemen $2,290

Iraq has had steady economic growth and a huge increase in its GDP since the 2003 invasion. Those aggregate numbers however don’t reveal the myriad problems that the country is facing. Almost all of that expansion was due to oil. In February 2009 a barrel of Iraqi crude sold at $38, down from its peak of $113.81 in July 2008. (NOTE: Iraqi oil sells below the world average, which went from $147 per barrel in July 2008 to around $50 currently.) The government dominates the economy, which is corrupt and inefficient. Investment is up, but it is caught in a bureaucratic maze that slows its impact. U.S. reconstruction funding is also coming to an end, and Baghdad has been unable to spend most of its capital budget that goes towards infrastructure. More importantly, the benefits of the development of Iraq have not trickled down much as there is still high unemployment, especially amongst the young, and high rates of poverty.

SOURCES

Agence France Presse, “Asia Companies The New Players In Iraq’s Oil Industry,” 4/9/09

Al-Ansary, Khalid, “Iraq investors bemoan red tape and lack of credit,” Reuters, 3/29/09

Aswat al-Iraq, “GDP higher by 10.9 % in 2008,” 2/11/09
- “Oil ministry says Iraq’s exports hit $1.9b in Feb.,” 3/28/09

Baker, Luke, “Investors ready for Iraq invasion as troops pull out,” Reuters, 12/22/08

Department of Defense, “Measuring Stability and Security in Iraq,” December 2008
- “Measuring Stability and Security in Iraq,” March 2009

Glanz, James, “In Report to Congress, Oversight Officials Say Iraqi Rebuilding Falls Short of Goals,” New York Times, 10/31/07

Inter-Agency Information and Analysis Unit, “Iraq Labour Force Analysis 2003-2008,” United Nations Office for the Coordination of Humanitarian Affairs, January 2009

Lando, Ben, “Iraq oil exports drop in February,” Iraq Oil Report, 3/25/09

O’Hanlon, Michael and Campbell, Jason, “Iraq Index,” Brookings Institution, 2/26/09

Special Inspector General For Iraq Reconstruction, “Hard Lessons,” 1/22/09
- “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/09
- “Quarterly Report to the United States Congress,” 10/30/08

UPI, “Iraqi Red Crescent predicts continued need,” 10/30/08

World Food Programme, “Comprehensive Food Security And Vulnerability Analysis In Iraq,” November 2008