Awake-in-3D: How Iraq’s Recent Economic Growth is Paving the Way for a Stronger IQD

How Iraq’s Recent Economic Growth is Paving the Way for a Stronger IQD

On July 16, 2024
By Awake-In-3D

Iraq’s Financial Transformation Could Mean Big Changes for Its IQD Currency

In This Article

• Iraq’s Ranking in the Global Economy
• Inflation and Oil Production
• The Soft Power Index and Economic Diversification
• Implications for the Iraqi Dinar (IQD)

Iraq’s economy is showing promising signs of growth and stability, as evidenced by its recent global and regional rankings. This economic progress could pave the way for a stronger Iraqi Dinar (IQD) and greater financial independence.

Iraq’s Ranking in the Global Economy

According to CEOWORLD, Iraq has emerged as the fifth-largest economy among Arab nations and the 52nd largest globally in 2024.

The country’s Gross Domestic Product (GDP) for the year stands at $265.894 million, with projections indicating steady growth reaching $345.074 million by 2029. This upward trajectory places Iraq on a stable path towards economic robustness and a more influential role in the region.

Despite rising inflation concerns worldwide, the United States remains the largest economy with a GDP of $28.78 trillion, followed by China at $18.54 trillion. Germany, Japan, and India also continue to solidify their positions in the top five, each leveraging their unique economic strengths.

Inflation and Oil Production

Iraq’s economy heavily relies on its oil production capabilities, which have seen a significant boost recently.

The North Oil Company (NOC) in Kirkuk governorate reported an increase in production to over 360,000 barrels per day (bpd), with plans to reach 400,000 bpd by year-end. The Iraqi Drilling Company’s efforts to develop and rehabilitate oil wells have contributed to this growth, highlighting the sector’s potential for further expansion.

Oil expert Ali Khalil noted that while the current production represents about 50% of NOC’s potential, there is ample room for increased output. This production capability demonstrates the need for the Ministry of Oil to invest in the public sector and enhance the infrastructure, ultimately boosting revenue for Iraq’s state treasury.

The Soft Power Index and Economic Diversification

Iraq’s improved ranking in the Soft Power Index, climbing from 116th to 99th place globally, reflects its growing influence on international affairs.

The index evaluates a country’s ability to impact global decisions through its reputation, culture, governance, and economic relations. Among Arab nations, Iraq ranks fifth, following the United Arab Emirates, Saudi Arabia, Qatar, and Egypt.

Economic diversification remains crucial for Iraq’s stability. Although oil revenues account for 89% of the federal budget, there has been a notable increase in non-oil revenues, contributing 11% to the total income.

This diversification is vital for reducing the country’s vulnerability to global oil market fluctuations and fostering sustainable economic growth.

Implications for the Iraqi Dinar (IQD)

The steady economic growth and diversification efforts could have significant implications for the value of the Iraqi Dinar (IQD).

With a more stable financial system and increased non-oil revenues, Iraq is poised to enhance the value of its currency. Achieving greater economic independence and reducing reliance on U.S. influence will be key factors in this process.

Financial experts suggest that continued investment in infrastructure, particularly in the oil sector, and strategic economic policies will support the upward trajectory of the IQD.

The recent memorandum of understanding with the European Chambers of Commerce further signifies Iraq’s commitment to fostering international trade and supporting small and medium-sized enterprises.

The Bottom Line

Iraq’s economic progress is a testament to its resilience and strategic planning. As the country continues to enhance its financial system and diversify its economy, the potential for a stronger IQD becomes more tangible.

With continued efforts towards economic independence and stability, Iraq is on the right path to achieving significant fiscal success and a more influential global presence.

Supporting Articles:

• https://shafaq.com/en/Economy/Iraq-ranks-fifth-in-Arab-World-52nd-globally-in-largest-economies
• https://shafaq.com/en/Economy/Iraq-ascends-in-2024-Soft-Power-Index
• https://shafaq.com/en/Economy/Kirkuk-oil-production-surges-to-over-360-000-bpd
• https://shafaq.com/en/Economy/Iraq-s-fiscal-challenges-highlight-overreliance-on-oil-revenues
• https://shafaq.com/en/Economy/Iraq-signs-MoU-with-European-Chambers-of-Commerce-to-boost-trade

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