Business Monitor International maintained its forecast of 7.9% average real growth for Iraq's construction sector between 2013 and 2017, despite the government's recently-announced $250bn to $275bn five-year infrastructure investment plan.
It considered that the plan constitutes an encouraging sign that the government is making serious efforts to address the country's ongoing infrastructure deficit. But it noted that similar plans targeting the infrastructure sector have been previously approved by authorities, but with minor progress being effectively made.
BMI attributed the government's inability to fully execute budgeted investments to weak institutions and a lack of governance, and considered that authorities have made little effort to address these deficiencies. It noted that improvements in project planning, as well as in tendering and due diligence processes, are crucial to ensure the success of a comprehensive investment plan.
Also, BMI said that Iraq needs to reform its oil & gas sector, which is still far below potential, in order to secure the funding for the investment plan given that the latter will be predominantly financed by the government. Further, it noted that political and security instabilities remain key issues, as divisions within the political class would prevent spending from being approved.
Business Monitor International – Byblos Research