War-torn Iraq may slowly become a hot spot for investor capital.
According to CNBC, citing data from the World Bank, Iraq’s economy is expected to grow by 7.2% this year, more than twice the average growth rate in the Middle East.
Yet, the country has many hurdles to overcome, most notably, a brutal terrorist insurgency by the Islamic State (ISIS) that has ravaged much of northern and western Iraq.
Furthermore, oil prices are notably lower than they were in the first half of the decade. “Oil at $30 was devastating for a growing country like Iraq, especially coming down from above $100,” Shwan Taha, founder of Rabee Securities, a Baghdad brokerage firm, told CNBC.
But experts expect Iraq to fair better with lower oil prices than their OPEC peer Saudi Arabia, which has relied on high oil prices to support its domestic budget.
With current prices of oil at under $50 a barrel, “it is a good price to give a breather and also not to cause the population to be dependent on it,” Taha said.
The International Monetary Fund (IMF) has also given the country a $5.4 billion loan to boost economy stability, which could appeal to potential investors.
CNBC reports that Iraq’s debt is likely to fall below 79% of its gross domestic product this year and payment delays to international oil companies are expected to be cut from 220 days to 120 days.
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For the moment, however, investors are wary of the country’s current instability — Iraqi troops and Kurdish fighters are pushing into Mosul as part of an offensive to retake the key city from ISIS. Despite Iraq’s oil bounty and agricultural promises, experts predict it could take years for the country to bounce back.
“Although Iraq has the natural resources to meet some of the criteria for emerging market status, on others it is still quite far away. We think it could take a decade or more before this would become a real discussion,” Alan Cameron, London-based economist with Exotix Partners, told CNBC.
