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Iraq Country Risk Report 20 2018

Iraq Country Risk Report 20 2018

Political risk will remain elevated over the coming quarters, especially in the run-up to the elections planned for May, due to the highly mili-tarised nature of Iraqi society, grievances among religious and ethnic minorities, intra-Shi'a tensions and external powers vying for influence.

Our core view is for Prime Minister Haider al-Abadi to secure a second term in the May elections, ensuring relative policy continu-ity – although greater political fragmentation and endemic corruption will weigh on policy-making. That said, a return of Nouri al-Maliki to premiership cannot be ruled out either – a scenario which would pose risks to social stability and the country's reconstruction process.

Real GDP growth will pick up modestly in 2018, reflecting a brighten-ing outlook for the non-oil economy as the reconstruction process kicks off. However, weak growth in oil production, given the OPEC-stipulated production cuts, and elevated political risk will continue to weigh on the economic outlook. We forecast growth to accelerate in 2019.

The fiscal position of the Iraqi government will see some modest improvements over the coming years, as recovering oil prices feed through to higher revenues. We forecast the Iraqi government to post a budget deficit equivalent to 6.6% of GDP in 2018. Government ef-forts to contain the public sector salary bill will be mitigated by fiscal slippage ahead of the elections and elevated reconstruction costs.

The Kurdistan Regional Government (KRG) will continue to strug-gle politically and economy over the coming years, owing to the consequences of Baghdad's military offensive following the region's independence referendum in September 2017.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook I
Gradual Recovery In 2018 On Weak Oil Exports
Economic Growth Outlook II
Aid Pledges Positive For Reconstruction, Instability Risks Persist
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Fiscal Policy And Public Debt Outlook
Deficit Reduction Constrained By Political Pressures And Reconstruction
Structural Fiscal Position
TABLE: BREAKDOWN OF REVENUES AND EXPENDITURE IN 2015
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Outlook On External Position
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: BREAKDOWN OF IMPORTS IN 2016
TABLE: BREAKDOWN OF EXPORTS IN 2016
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Chapter 2: 10-Year Forecast
The Iraqi Economy to 2027
Reconstruction And Oil Set To Be The Lifeblood Of The Economy
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics I
PM Abadi Well-Positioned To Secure Second Term In May Elections
TABLE: POLITICAL OVERVIEW
TABLE: OVERVIEW OF COALITIONS FOR THE MAY ELECTION
Domestic Politics II
Iraqi Kurdistan: Worst Is Past, But Crisis Not Over Yet
Long-Term Political Outlook
Risks Of State Collapse – Scenarios Assessed
Chapter 4: Operational Risk
Operational Risk
TABLE: OPERATIONAL RISK
Business Crime
TABLE: BUSINESS RESPONSE TO WHITE COLLAR CRIME AND ORGANISED CRIME
Education
TABLE: GRADUATES OF TERTIARY EDUCATION, 2010-2012 ('000)
Chapter 5: BMI Global Macro Outlook
Trade Tensions Take Centre Stage
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: IRAQ – MACROECONOMIC DATA & FORECASTS

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