DUBAI: Iraq’s economy is likely to shrink 2.7 percent this year, the first contraction since the US-led invasion in 2003, after Islamic State militants occupied swathes of the major oil exporter, the International Monetary Fund said yesterday.
The current economic downturn comes after a 4.2 percent gross domestic product growth in 2013, which was the weakest rate since 2007, the IMF’s regional economic outlook shows.
It still pales, however, in comparison with a 41.4 percent output plunge in 2003 when the US-led coalition invaded the country to topple the government of its former strongman Saddam Hussein.
Islamic State swept through northern Iraq in the summer, facing little resistance from government troops. The confict has halted the expansion of Iraq’s oil production, which is expected to decline slightly to 2.9 million barrels a day, while exports of 2.4 mbd should remain close to last year’s level, the IMF said.
“Non-oil GDP growth will also likely move to negative territory, compared to growth of over 7 percent in 2013, as ghting undermines confidence, disrupts the supply of fuel and electricity, increases trade and distribution costs, and depresses investment,” it said.
However, growth should pick up again to a modest 1.5 percent in 2015 mainly driven by a rise in oil output, the IMF expects, although it cut its longer-term crude output projection to 4.4 million barrels per day in 2019 from 5.6 mbd seen in May. Reuters
