• GDP: US$24.3 billion (2005 estimate).
• Main imports: Food, medicine and manufactures.
• Main exports: Crude oil, crude materials excluding fuel, food and live animals.
• Main trade partners: Canada, Germany, Italy, Japan, Jordan, Spain, Syrian Arab Republic, Turkey and USA.

With proven deposits of over 110 billion barrels – about 10 per cent of the total – Iraq has the world’s second-largest oil reserves. Oil income drove Iraq’s rapid post-war development until the end of the 1970s. However, the Iran-Iraq war, which lasted from 1980 until 1988, brought Iraq’s growth to a halt. Now Iraq's US-led occupation has formerly ended and the transferral of power to a new Iraqi government has been instigated, perhaps a glimmer of economic optimism can be permitted, although the situation remains perilous and eminently unstable. As reconstruction progresses, the country’s economic momentum should recover, although the scale of destruction and dilapidation is such that this continues to be a lengthy process.
The agricultural sector by contrast fared relatively well, at least during the early sanctions period as Iraq sought to grow more food in order to compensate for the absence of imported produce. However, light industry, which the government originally promoted as part of an import substitution programme, operated far below the levels of the 1980s. The all-important oil industry meanwhile was constrained by limits imposed by the UN sanctions. But gradually the Iraqis developed an extensive network of smuggling routes and ‘illicit’ markets; indeed, the scale of these was such that by 2001, the Iraqis announced that they were no longer prepared to abide by the agreement with the UN and withdrew entirely from the international market.
But there was no disguising the decline which the Iraqi economy had undergone, especially during the previous 10 years. Accurate figures about the Iraqi economy are inevitably hard to come by. There were several bouts of hyperinflation during the 1990s, and the Iraqi dinar lost 90 per cent of its value during the decade. The economy contracted at an estimated average annual rate of 5 per cent during the same period. In 2002, inflation was 70 per cent, and the economy contracted by 6.5 per cent. Iraq also has a vast external debt in the region of US$200 billion, the majority of which is owed to Kuwait and Saudi Arabia. Hopes that the economy might grow in 2003 were dashed by both the extent of the rehabilitation needed by the oil industry and the consequences of the US-led war against Iraq.
In the year ending May 2005, inflation was 33 per cent. However, the rebuilding of oil, electricity and other production sources is proceeding effectively. The International Monetary Fund (IMF) has loaned US$685 million towards rebuilding Iraq.

Any companies with involvement or planned involvement in re-construction projects in Iraq should contact the Iraq Unit at UK Trade and Investment (tel: (020) 7215 8893; e-mail: iraqunit@uktradeinvest.gov.uk).

Formal courtesies are common and expected. Visiting cards are regularly exchanged and these are often printed in Arabic and English. Meetings may not always be on a person-to-person basis and it is often difficult to confine items to the business in progress as many topics may be discussed in order to assess the character of colleagues or traders. Office hours: Sat-Thur 0800-1400. Friday is the weekly day of rest when offices tend to be closed. During the month of Ramadan, hours are reduced.

Federation of Iraqi Chambers of Commerce and Industry
PO Box 5665, South Gate, Baghdad, Iraq
Tel: (1) 888 0091.

Baghdad Chamber of Commerce
Al-mustansir Street, Baghdad, Iraq
Tel: (1) 817 6213 or 6214.
Website: www.baghdadchamberofcommerce.org
.