Economy of Iraqi Kurdistan

Economy of Iraqi Kurdistan

Erbil (Hewlêr), capital of Iraqi Kurdistan
Currency	Iraqi dinar (IQD)
Fiscal year	Calendar year
Statistics
GDP	168.7 billion (PPP, 2013)
GDP rank	61st (PPP, 2012)
GDP growth	8% (2013)
GDP per capita	$ 11,300 (2013 est.)
GDP by sector	agriculture: 8.0%; industry: 44.0%; services: 48.0% (2011 est.)
line-height:1.1em	3.86 %
Population below poverty line	12 % (2015 est.)
Gini coefficient	34.25
Labour force	5.156 million (2012 est.)
Labour force by occupation	agriculture: 27 %; industry: 32 %; services: 41 % (2010)
Unemployment	6.3% (2013 est.)
Average gross salary	USD 9840 per year/ USD 820 per month
Main industries	petroleum, Natural gas, hydrocarbons, light weapons and small arms and ammunition, textiles, clothing and footwear, radio equipment, electrical equipment, auto assembly, construction materials, pharmaceuticals, food processing, petroleum refining.
Ease-of-doing-business rank	18th
External
Export goods	Petroleum products, Crude oil, Natural gas, textiles and clothing, wool and woolen products, citrus fruits and dried fruits, leather and leather products.
Main export partners	Turkey 32.5% Israel 15.3% United States 12.2% Germany 9.1% United Kingdom 5.7% Jordan 5.5% Sweden 5.0% Iraq 4.7% Lebanon 4.6% Norway 4.5% http://www.investingroup.org/publications/kurdistan/overview/economy/
Import goods	heavy machinery and engineering equipment, high-tech products, machine tools, heavy weapons and ammunition, defense equipment, pharmaceutical products, Medical equipment and medical electronics, heavy automobiles and trucks, computer hardware and software, Telecommunications equipment, fiber optics.
Main import partners	Turkey 40.6% United States 18.0% Israel 16.7% Russia 8.4% Germany 6.6% Sweden 5.2% Georgia 5.1% Azerbaijan 5.0% Iran 4.7 % Finland 4.5 % http://www.investingroup.org/publications/kurdistan/overview/economy/
FDI stock	$74.49 billion (31 December 2012 est.)
Gross external debt	$24.2 billion (31 December 2012 est.)
Public finances
Public debt	14.2% of GDP (2012 est.)
Revenues	$52.67 billion (2012 est.)
Expenses	$53.45 billion (2012 est.)
Foreign reserves	US$ 87.38 billion (31 December 2012)
line-height:1.25em;padding:0.2em;

Economy of Iraqi Kurdistan refers to the economy of the autonomous Kurdistan region in Northern Iraq. The Kurdistan region's economy is dominated by the oil industry, agriculture and tourism. Due to relative security and peace in the region and more economically liberal and market-oriented policies, it has a more developed economy in comparison to the rest of Iraq and its neighbor Syria. Its economy has the characteristics of a macro-stable, liberal, Newly industrialized country similar to that of neighbouring Turkey, Azerbaijan, Armenia and Georgia . Almost one-third of the labour force is employed in semi-skilled and skilled industrial jobs, one of the highest in the developing world and similar to that of Britain and Germany in the 1890s.

History

1992-2003

The Kurdistan Regional Government territories in northern Iraq have been semi-autonomous since the 1990 Gulf War and subsequent protection of the region from the hostile forces of the Hussein regime forces by the Allied establishment of a no fly zone.

Prior to the removal of Saddam Hussein, the Kurdistan Regional Government received approximately 14% of the revenues from the UN's Oil-for-Food Program. By the time of the US invasion of Iraq in 2003, the program had disbursed $8.35 billion to the KRG. Iraqi Kurdistan's relative food security allowed for substantially more of the funds to be spent on development projects than in the rest of Iraq. By the program's end in 2003 $4 billion of the KRG's oil-for-food funds remained unspent. Between 1992 and 2003, the GDP growth rate was between 6% and 10%.

During US occupation of Iraq (2003-2011)

Following the removal of Saddam Hussein's administration and the subsequent violence, the three provinces fully under the Kurdistan Regional Government's control were the only three in Iraq to be ranked "secure" by the US government. According to the KRG website, not a single coalition soldier has died nor a single foreigner been kidnapped since the 2003 invasion of Iraq in areas administered by the KRG.

The relative security and stability of the region has allowed the KRG to sign a number of investment contracts with foreign companies. In 2006, the first new oil well since the invasion of Iraq was drilled in the Kurdistan region by the Norwegian energy company DNO. Initial indications are that the oil field contains at least 100 million barrels (16,000,000 m³) of oil and will be pumping 5,000 bbl/d (790 m³/d) by early 2007. The KRG has signed exploration agreements with several other oil companies, including Canada's Western Oil Sands and the UK's Sterling Energy and Gulf Keystone Petroleum.

The stability of the Kurdistan region has allowed it to achieve a higher level of development than other regions in Iraq. In 2004, the per capita income was 50% higher than in the rest of Iraq. By 2009, this was 200% higher. The highest growth rates achieved was around 12.7% in 2005-2008 and again 11.5% in 2010-2012. Since 2012, the growth rate has stabilized between 7% and 8%. The government continues to receive a portion of the revenue from Iraq's oil exports, and the government will soon implement a unified foreign investment law.

The KRG also has plans to build a media city in Arbil and free trade zones near the borders with Turkey and Iran by 2016. The KRG is an integral part of the general cultural and economic region also containing Syria, Turkey, Lebanon, Israel, Cyprus, Armenia, Azerbaijan, Iran, Georgia, Greece, Bulgaria, Romania, and Moldova, i.e. the Eastern Mediterranean-Black Sea-Caucasian region. As such, the KRG leadership has expressed plans for a more thorough integration and relationship with these countries, especially the three Caucasian Republics, Turkey, and Moldova. This would give the Iraqi Kurdish economy a better bridge-head or foothold into Russia, Europe and the EU. According to President Barzani, this would also cement KRG's essentially Eurasian character rather than an undesirable Middle Eastern-Arab character. According to Barzani, the Kurdish culture, national characteristics, work ethics, business culture, etc. are more similar to that of Georgia, Moldova, etc. than to that of the rest of Iraq. It also has a similar Eastern Mediterranean climate, cuisine and thus a favourable tourist destination.

Since 2003, the stronger economy of Iraqi Kurdistan has attracted around 20,000 workers from other parts of Iraq.

Iraqi Kurdistan has a well-balanced budget, with relatively efficient bureaucracy and social welfare services by Middle Eastern standards, and military expenditures well under control. Budget deficit is almost negligible. It has also better social services than its neighbors, with good quality and free education up to University level, and efficient primary healthcare. Secondary and tertiary healthcare however remains a problem in rural areas. Regulation and labour laws are very favourable, and red tape is much less than Middle Eastern standards. It takes approximately four days to start a business and get the necessary permits. Licensing is required only in manufacturing alcohol, cigarettes, and in the defense sector (much of which is still State-owned, especially smaller factories for producing small arms and ammunition.)

Special Economic zones

The KRG currently has four SEZs , in Dohuk, Batifa, Shaqlawa and Chamchamal. The first SEZ was set up in 1999 in Batifa, and the last in 2011 in Shaqlawa. The SEZs are mainly for manufacturing of hydrocarbons, pharmaceuticals , packaged food and processed food. These include the largest bottling plant for Coca Cola in the Middle East outside of Egypt, Israel and the GCC; and the largest production center for ice cream in Iraq and Syria combined. The Chamchammal SEZ is dedicated solely for the petroleum and natural gas sector. Further two more SEZs, in Amedi and Bazian, have been planned to be completed before 2016. SEZs together account for nearly 30 % of all industrial jobs and 40 % of all industrial revenue and output.

2011-Present

Despite objections from Baghdad, the Erbil governate says the KRG has signed contracts with 42 oil companies from 17 countries with more favourable terms than those offered by Iraq’s central government. As recently as 2014 KRG officials claimed to sell 200,000 bpd and optimistically predicted exports of 1 million barrels annually.

The Kirkuk–Ceyhan Oil Pipeline allows the export of oil from the Taq Taq and Tawke oil fields

The Kurdistan Regional Government begun exporting crude oil by truck to Turkey during the summer of 2012. In 2013, the Kurdistan Regional Government completed a pipeline from the Taq Taq field through Khurmala and Dahuk to Faysh Khabur on the Turkey-Iraq border, where it is connected to the Kirkuk-Ceyhan pipeline. This 36-inch (910 mm) diameter pipeline has capacity of 150,000 barrels per day (24,000 m³/d). It allows the export of oil from the Taq Taq and Tawke oil fields. On 23 May 2014, the Kurdistan Regional Government announced that the first oil transported via the new pipeline was loaded into tanker at Ceyhan.

Financial crisis

The Kurdistan region was hit by an economic crisis in 2015. Despite an increase in overall production, oil revenues have decreased significantly since 2014 due to lower oil prices, disputes with the central government and the rapid expansion of the Islamic State. In June 2015, Exxon Mobil, the largest exporter by volume, evacuated its staff and left its facilities in the care of peshmerga. In early December 2015, peshmerga reportedly repelled an IS attack on those facilities, though the prospect of such attacks poses a deterrent to foreign investment. 17% of the central government’s budget is earmarked for distribution to the KRG, but no funds have been disbursed since February 2014. A US-mediated agreement in 2014 would have resolved the conflict between the oil ministries of the KRG and the GOI, but this too collapsed over allegations of under payment. Erbil’s independent contracts sold for less than market price due to its poor quality.

According to some estimates, the debt of the Kurdish government reached $18 billion by January 2016. Many government workers (including teachers, soldiers and other employees) have not been paid for 3 months from as of October 2015. The President of the Kurdistan region Barzani however announced that increased oil sales are about to balance the Kurdish budget. In October 2015, large-scale riots by government employees broke across the Kurdistan region, with several fatalities.

Wealth

According to Iraqi president Jalal Talabani, since 2003 the number of millionaires in the Kurdish city of Silêmani has increased from 12 to 2000, reflecting the financial and economic growth of the region.

In 2009, Iraqi Kurdistan had the lowest poverty rates in Iraq.

See also

• Economy of the Middle East