Country Report Iraq December 2009

Outlook for 2010-11

• The drawdown of US forces, and the continued weakness of central authority, may allow militia and insurgent groups to re-establish themselves in some areas, although violence is unlikely to return to 2006-07 levels.
• There is a growing likelihood of a realignment of Iraqi politics, with the prime minister, as head of the State of Law list, set to run against his former allies in the Iraqi National Alliance in the parliamentary election in March 2010.
• The role of foreign oil companies will gradually expand, as they are drawn in by the unique opportunity presented by Iraq's massive oil reserves.
• We expect the fiscal deficit to narrow markedly in 2010-11, from an estimated US$9.5bn in 2009 to an annual average of US$4.3bn (equivalent to 4.5% of GDP), as oil revenue recovers.
• Economic growth is likely to strengthen in 2010-11, as foreign direct investment in a range of oil and infrastructure projects picks up, and improving security boosts consumer demand and, in turn, wholesale and retail trade.
• Iraq's current account will largely track movements in oil export receipts. Having fallen sharply in 2009, export earnings are forecast to recover strongly in 2010, although earnings growth will be held back in 2011 as oil prices fall.

Monthly review

• On December 6th, after months of wrangling, and a surprise veto by the vice-president, Tariq al-Hashimi, a compromise was reached on the electoral law, allowing the parliamentary election to go ahead in March 2010.
• The new electoral law has been revised, allowing Iraqi exiles' votes to be assigned to their province of origin and increasing the number of seats in parliament from 275 to 325.
• The investment law has been amended to allow foreigners to own land for housing projects. But the new law has done little to extend the limited rights of foreigners, who are still not allowed to own land for oil or hotel projects.
• The cabinet has failed to ratify the recent oil contracts signed with ExxonMobil of the US and Eni of Italy, despite the oil minister's push for early ratification.
• Plans have been announced to launch a fourth mobile-phone licence, involving a partly state-owned operator. The announcement has prompted protests from the incumbent mobile operators.
• China has announced that it will forgive 80% of Iraq's debt from the 1980s.
• An unnamed US official has said that bank lending has risen by 80% this year, and official data have indicated a sharp rise in deposits in 2009.

Source: Country Report

This report covers the following industry codes:
SIC Code: 15;65;60
NAICS Code: 23;53;52

• Highlights
• Outlook for 2010-11: Domestic politics
• Outlook for 2010-11: In focus
• Outlook for 2010-11: International relations
• Outlook for 2010-11: Policy trends
• Outlook for 2010-11: Fiscal policy
• Outlook for 2010-11: Monetary policy
• Outlook for 2010-11: International assumptions
• Outlook for 2010-11: Economic growth
• Outlook for 2010-11: Inflation
• Outlook for 2010-11: Exchange rates
• Outlook for 2010-11: External sector
• Outlook for 2010-11: Forecast summary
• The political scene: Iraqi electoral law is finally passed
• The political scene: Parliament passes a second draft of the electoral law
• Economic policy: Investment law is amended to allow foreigners to own land
• Economic policy: Cabinet fails to ratify US and Italian oil deals
• Economic policy: Late note
• Economic performance: Iraqi telecoms companies oppose plan for fourth licence
• Economic performance: China to forgive 80% of Iraq's debt from the 1980s
• Economic performance: Private Iraqi banks grow rapidly
• Economic performance: Quality of life index: Iraq
• Data and charts: Annual data and forecast
• Data and charts: Quarterly data
• Data and charts: Monthly data
• Data and charts: Annual trends charts
• Data and charts: Monthly trends charts
• Data and charts: Comparative economic indicators
• Basic data
• Political structure