Iraq's GDP to grow 4.1% in 2019 thanks to oil prices, Moody's says

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Iraq's GDP to grow 4.1% in 2019 thanks to oil prices, Moody's says

Opec's second-largest producer is benefiting from improvement in security

Dania Saadi

December 13, 2018

Updated: December 13, 2018 04:16 PM

 

Gross domestic growth will accelerate from 2.8 this year to 4.1 per cent next year, the highest level since 2016’s 13.1 per cent economic expansion, the rating agency said. Reuters

Iraq’s economy is forecast to grow further in 2019 to a three-year high due to stronger oil prices that are expected to average $75 a barrel, Moody’s Investors Service said.

Gross domestic growth will accelerate to 4.1 per cent next year from 2.8 this year, the highest level since the 13.1 per cent economic expansion in 2016, the ratings agency said in a report on Thursday.

“Higher oil prices and output, as well as an expected increase in investment spending because of the improved security situation, have bolstered Iraq's economic outlook,” said the report. “However, oil price volatility and potential further social unrest that could weaken Iraq's economic infrastructure, as well as Iraq's vulnerability to environmental risks, exacerbated by outdated infrastructure are continued risks to growth.”

Iraq, the second-largest oil producer in Opec that pumped around 4.6 million barrels of oil per day in November, is benefiting from a rebound in oil prices this year after a three-year slump that sent prices to less than $30 a barrel in the first quarter of 2016. Improvement in security has also helped boost economic activity in the country.

Iraq’s economy, which shrank 2.1 per cent in 2017, is projected to expand 1.5 per cent in 2018 and 6.5 per cent in 2019, "largely from continuing reconstruction efforts", according to the International Monetary Fund.

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Stronger oil prices have helped Iraq lower its public debt to GDP ratio, which doubled to 66 per cent between 2013 and 2016, and narrow its fiscal deficit which peaked at 14.3 per cent of economic output in 2016, the report said.

“Higher oil prices since mid-2017 have reversed the deterioration in the government's fiscal position and boosted Iraq's foreign exchange reserves (including gold) to more than $58 billion at the end of September 2018,” the report said.

Iraq is projected to swing to its first fiscal surplus this year since 2012 compared with 1.6 per cent of GDP deficit in 2017.

“We expect a small fiscal surplus of around 0.4 per cent of GDP in 2018, though larger than planned spending increases during 2018 have prevented a more significant fiscal improvement,” Moody’s said.

Iraq relies on oil income for about 80 per cent of government revenue, a figure that peaked at 94 per cent in 2014 and remains one of the highest in the region. Public sector salaries and pensions represented about 50 per cent of total government expenditure or 20 per cent of GDP in 2016.

“While higher oil prices improve the government's fiscal performance, they also increase the risk of complacency on reforms aimed at decreasing vulnerability of Iraq's fiscal position to declines in oil prices,” Moody's said. “Public sector compensation has been the fastest-growing expenditure item in the government's budget. The ministries of education, defence and interior are the largest employers.”

https://www.thenational.ae/business/economy/iraq-s-gdp-to-grow-4-1-in-2019-thanks-to-oil-prices-moody-s-says-1.802292

[Mary B]

Moody’s gives Iraq stable credit rating

Dec 14, 2018 By Nik http://iqd.me/l/11
The government of Iraq has been given a Caa1 stable rating in the annual credit analysis by rating agency Moody’s.The rating reflects the “significant institutional and political challenges” and the deterioration of the government’s fiscal position over the past five years, states the Moody’s report.The rating agency does concede that Iraq is making slow progress on a structural reform agenda which includes an ongoing IMF programme and the development of new public institutions designed to make its public finances sustainable.It also highlights the relatively large size of Iraq’s economy, its substantial natural resources and high growth potential.But the task of diversifying its economy remains a challenge for Iraq because of infrastructure weaknesses such as an inefficient banking system, unstable electricity supply, skilled labour shortage and lax anti-corruption controls.A further decline in its sovereign rating, stated Moody’s, would reflect a rise in default rates or a further sharp increase in domestic political tension that disrupts oil production and the government’s ability to service its debt.©2018 funds 

 

http://www.fundsglobalmena.com/news/moody-s-gives-iraq-stable-credit-rating

[coorslite21]

My rating....5 snails.....CL

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A credit agency expects Iraq's gross domestic product to grow by 4.1% in 2019

 

money and business Economy News _ Baghdad A credit agency predicted Iraq's gross domestic product (GDP) growth of 4.1 percent in 2019. "Total domestic growth in Iraq will accelerate from 2.8 this year to 4.1 per cent next year in 2019, the highest level since the economic expansion of 13.1 per cent in 2016," Moody's said in a report. Iraq's economy is expected to grow further in 2019 to its highest level in three years due to higher oil prices, which are expected to average $ 75 a barrel. "Rising oil prices and production, as well as the expected increase in investment spending due to improved security, have boosted Iraq's economic prospects," the report said.  However, volatile oil prices and potential social unrest that could weaken Iraq's economic infrastructure, as well as Iraq's vulnerability to environmental risks, exacerbated by its old infrastructure are continuing risks of growth. " Iraq, OPEC's second-largest oil producer, which pumped about 4.6 million barrels of oil per day in November, benefited from a recovery in oil prices this year after a three-year slump that led to prices falling below $ 30 a barrel in the first quarter of 2016. Security to promote economic activity in the country. Rising oil prices have helped Iraq reduce the public debt to GDP ratio, which doubled to 66 percent between 2013 and 2016 and reduced its fiscal deficit, which peaked at 14.3 percent of economic output in 2016, according to the report. "The rise in oil prices since mid-2017 has reversed the deterioration in the government's financial position and boosted Iraq's foreign currency reserves (including gold) to more than $ 58 billion at the end of September 2018," the report said. Views 36   Date Added 12/17/2018