Iraq Defence and Security Report 2015
BMI View: We forecast Iraqi defence expenditure to expand steadily over the next five years, reachingUSD24.6bn by 2019.This figure remains moderate on a global comparison - due to the Iraqi economy'scontinued deterioration amid elevated levels of instability - however, as a percentage of overall GDP, themilitary budget makes up a very high 8.7% - reflecting the continued demand for funding of Baghdad'scounter-offensive against IS. As the country does not maintain a significant domestic defence industry (andinvestment into the development of local military manufacturing capabilities is unlikely to be forthcomingamid the ongoing instability), we expect the government to remain wholly reliant on defence imports incoming years - sourcing the majority of equipment from the US.
The demand for military equipment remains high in Iraq amid elevated levels of violence, terrorism,political instability and crime. Over the forecast period to 2019, we expect the counter-offensive against ISto be a key driver of defence spending. With financial assistance from the US, we forecast the country'sdefence budget to amount to USD17.5bn in 2015, representing a y-o-y increase of 7.8% in US dollar terms.
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