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Economic situation Need for deep reforms
The COVID-19 pandemic and falling oil prices caused a slump in Iraq’s economy of 12 per cent in 2020. In 2021, the economy recovered and gross domestic product (GDP) rose by 1.6 per cent. In 2022, the country saw growth of seven per cent thanks to a sharp increase in oil prices.
In the long term, fossil fuels will become less important as sources of energy worldwide. Against this backdrop, Iraq will need to look beyond the oil sector to secure growth and its competitiveness and hence prosperity and opportunities for its people. In order to reduce the dependence on the oil sector, deep structural reforms, a shift in energy policy towards renewable energy and an expansion of economic activity to new production and service areas are needed.
More jobs and training
Steps need to be taken to improve the business and investment climate in Iraq so as to revive the economy in a sustainable way and create opportunities for young people. The country urgently needs a dynamic private sector that creates future-oriented long-term employment. Almost 40 per cent of Iraqis are younger than 15. In 2022, according to the International Labour Organization (ILO), the unemployment rate was 15.5 per cent. Among young people 37 per cent were not in education, training or employment.
However, at the moment the public sector is overstaffed and a much sought-after employer while the private sector is still comparatively unattractive. Almost 40 per cent of all Iraqis are employed in the public sector. In 2022, according to the World Bank, more than 30 per cent of the national budget was channelled into this sector, considerably limiting the government's scope for action.
As at: 31/08/2023