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Key developments: The IMF’s October 2026 World Economic Outlook forecasts a sharp 16% contraction of Iraq’s economy in 2026, followed by a robust 19% growth in 2027. This follows a modest 0.4% decline in 2025 and accompanies a rise in inflation to 3.5% and a widening current‑account deficit to 10.8% of GDP.
Why it matters: A contraction of this magnitude signals severe fiscal pressure, heightened inflation and a balance‑of‑payments strain, threatening public services and investment. The projected rebound, however, suggests that higher oil revenues or policy reforms could restore growth, offering a window for reforms and diversification.
What to watch next: Monitor oil price trends, government fiscal measures, and inflation controls that could influence the IMF’s outlook. Watch for any policy announcements aimed at narrowing the current‑account gap and stabilising the currency, as well as the implementation of reforms that could sustain the projected 19% growth in 2027. [[1]]