Iraq will emerge as the world's fastest growing economy in 2012 and 2013, according to Bank of America Merrill Lynch (BAML).
The Wall Street bank’s data indicates that amongst all the major economies it tracks, Iraq is going to be the only country that will post double-digit-growth in 2012 – clocking a 10.5% improvement in GDP this year.
The second fastest-growing economy this year will be China, with 7.7% GDP growth. In the meantime the ten most vital emerging markets will grow at 5.5% this year, weighed down by problems in OECD economies, BAML data presents.
Iraq will post a little lower but still impressive 8.2% growth in 2013, defeating China one more time (which is anticipated to grow 8.2% next year), to appear as the fastest growing economy again, based on BAML calculation.
The Economist Intelligence Unit (EIU) has a slightly lower prediction for Iraq of 8.5% in 2012 and 8.2% in 2013, although expects even better growth in the upcoming years.
EIU said that they expect Iraq’s economy to grow by a vigorous 9% on average during 2013-17, primarily by the rise of oil production. Especially in the central areas around Baghdad may continue to interrupt the economy because of the violence, yet improvement would not stop its journey and overall security situation will be handled in proper way.
By mid-2012, oil production was above 3 million barrels per day (million bpd) of which around 2.4 million bpd was exported. Iraq’s improving steadiness, its huge resource base and deals with international companies to develop the country’s key fields provide the foundation for a speedy increase in oil output in the coming years, said IEA, which believes that Iraq will have control over OEPC oil production growth over the upcoming two decades.
Analysts have hopes that the government will finalize the hydrocarbon’s law and solve its unresolved matter with KRG to offer greater clarity to foreign oil investors, who are the major part in funding Iraq’s growth.
Iraq needs to improve its financial sectors, as well as the legal infrastructure to attract investment, especially the financial services sector.
The International Monetary fund said that "Reinforcing central banking operations includes rebuilding the capacity of the central bank to conduct monetary and exchange rate policies, supervise banks, and manage the country's foreign exchange reserves".
In spite of these challenges coming in front, the economy is enjoying a renewal which could raise the standard of loving of many Iraqis and bring them into middle of the society, which could secure domestic growth, rather than depending on oil exports.
The economy is expanding with the restoration of the oil sector of the country and the improvement in the security situation. And having the international community support, debt levels have been brought down to maintainable levels.