Iraq Business Forecast Q1 2007

Content

• Chapter 1: Political Outlook
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Political Risk Ratings
  • Domestic Policy
  • Reaching Tipping Point - Again
  • As US patience with the Maliki government wears thin, Washington is looking to a decisive shift in its Iraq
  • strategy The Bush administration has ditched the language of 'staying the course', and may be less willing
  • to micro-manage Iraqi politics
  • Power To The Regions
  • Plans for the southern provinces to secede are gaining momentum This will prove to be a key driver of Iraqi
  • politics throughout 2007
  • Table: Cabinet List Aug-06
  • Another Security Plan
  • The Iraqi government appears bereft of easy solutions to curb the violence, heightening the sense that
  • things will have to get worse before they have a chance of getting better
  • December 2005 National Assembly Election Results
  • Kurdistan Regional Government Cabinet May-05
  • Foreign Policy
  • Neighbourhood Threat
  • Saudi Arabia is limbering up to make a more concerted effort to stabilise Iraq - aware that Iran is already
  • well entrenched as the most influential outside regional power
• Chapter 2: Economic
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Economic Risk Ratings
  • Introduction
  • Volatile Oil Sector Clouds Economic Outlook
  • The economy's overwhelming dependence on oil exports will remain a structural weakness, given the
  • uncertain outlook for the Iraqi hydrocarbons sector To engineer a sustained improvement in oil production,
  • the government urgently needs to introduce a hydrocarbons law, though security concerns will also
  • imperil investment plans from international oil companies
  • Our Two Scenarios
  • The central government is looking to follow the Kurdistan Regional Government's example by prioritising a
  • new hydrocarbons investment law However, a flood of oil sector activity is unlikely before 2008 at the earliest
  • Economic Activity
  • Security Situation Starves Investment Prospects
  • Iraq will continue to struggle to raise domestic investment levels, leaving the non-oil economy in a stagnant
  • condition The failure to contain sectarian violence means the Iraqi economy will continue to rely on uneven
  • oil exports to drive activity
  • Table: Economic Indicators
  • Monetary Policy
  • Central Bank Struggles To Contain Inflation
  • With few non-conventional monetary policy instruments at its disposal, Iraq is failing to contain inflation
  • Though planned subsidy reductions and fuel import liberalisation measures may take some of the sting out
  • of price rises, inflation will remain one of the key economic black spots in Iraq
  • Foreign Direct Investment
  • Levels of foreign direct investment will remain low, given security risk concerns and the uncertainty
  • surrounding the investment climate However, regional investors see opportunities in Iraq, many of which
  • are likely to be concentrated in the real estate sector Iraqi Kurdistan will continue to attract the lion's
  • share of FDI inflows
• Chapter 3: Special Report
  • BMI Sovereign Risk Ratings
  • What And Where Are The Risks?
  • Table: BMI Sovereign RIsk Ratings
  • Middle East and Africa
  • A Mixed Bag
  • Table: Middle East & Africa Sovereign Ratings - Evolution of Willingness to Pay
  • Table: Middle East & Africa Sovereign Ratings - Evolution of Ability to Pa
• Chapter 4: Business Environment
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Business Environment Risk Ratings
  • Legal Issues
  • Labour Force
  • Size
  • Table: Demographic Indicators (2005)
  • Foreign Investment Policy
  • Overview
  • Table: Iraq, Annual FDI Inflows
  • Table: Middle East & Africa, Annual FDI Inflows
  • Foreign Trade Regime
  • Tax Regime
• Chapter 5: Key Sectors
  • Defence
  • Security Overview
  • Iraq's lack of a defence industry is unlikely to change for many years Indeed, the country will not be in
  • a political, economic or structural position to start to invest in or develop such an industry for around 10 years
  • Table: Iraq Insurgent Groups