Economy of Iraq

The economy of Iraq is dominated by the oil sector, which has provided about 99.7% of foreign exchange earnings during its modern history. As of 2021, the oil sector provides about 92% of foreign exchange earnings. Iraq's hitherto agrarian economy underwent rapid development following the 14 July Revolution (1958) which overthrew the Hashemite Iraqi monarchy. It had become the third-largest economy in the Middle East by 1980. This occurred in part because of the Iraqi government's successful industrialization and infrastructure development initiatives in the 1970s, which included irrigation projects, railway and highway construction, and rural electrification.

In the 1980s, financial problems caused by massive expenditures in the Iran-Iraq War and damage to oil export facilities by Iran led the Ba'athist government to implement austerity measures, to borrow heavily, and to later reschedule foreign debt payments. Iraq suffered economic losses of at least $80 billion from the war. In 1988, the hostilities ended. Oil exports gradually increased with the construction of new pipelines and restoration of damaged facilities, but again underwent a sharp decline after the Persian Gulf War. GDP dropped to one-fourth of the country's 1980 gross domestic product and continued to decline under postwar international sanctions, until receiving aid from the U.N. Oil-for-Food Programme in 1997.

The Coalition Provisional Authority made efforts to modernize Iraq's economy after the 2003 U.S.-led invasion, through privatization and reducing the country's foreign debt. As a result Iraq's economy expanded rapidly during this time, though growth was stunted by the insurgency, economic mismanagement, and oil shortages caused by outdated technology. Since mid-2009, oil export earnings have returned to levels seen before Operation New Dawn. Government revenues have rebounded, along with global oil prices. In 2011, Baghdad would increase oil exports above their then-current level of 1,900,000 bbl (300,000 m³) per day as a result of new contracts with international oil companies. It was thought likely to fall short of the 2,400,000 barrels (380,000 m³) per day it was forecasting in its budget. Iraq's recent contracts with major oil companies have the potential to greatly expand oil revenues, but Iraq will need to upgrade its oil processing, pipeline, and export infrastructure to enable these deals to reach their potential.The widespread presence of Western countries, led by the United States of America, with several military bases in which about 6,000 American soldiers are present, and the activity of more than 60 Western companies in the fields of military-defense-security (mostly)-economic-cultural and... The soil of this country is active, it has caused more severe economic fluctuations in Iraq and has greatly fueled the unrest.

An improved security environment and an initial wave of foreign investment are helping to spur economic activity, particularly in the energy, construction, and retail sectors. Broader economic improvement, long-term fiscal health, and sustained increases in the standard of living still depend on the government passing major policy reforms and on the continued development of Iraq's massive oil reserves. Although foreign investors viewed Iraq with increasing interest in 2010, most are still hampered by difficulties acquiring land for projects and other regulatory impediments.