View the information below regarding the economy of Iraq. The summary and statistics contains
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Iraq Country Page.
GDP (2001 est.): $59 billion.
Annual growth rate (2001 est.): 5.7%.
GDP per capita (2000 est.): $2,500.
Inflation rate (2001 est.): 60%.
Natural resources: Oil, natural gas, phosphates, sulfur.
Agriculture (less than 6% of GNP): Products--wheat, barley, rice, cotton, dates, poultry.
Industry: (less than 13% GNP): Types--petroleum, petrochemical, textile, cement.
Trade (2001): Exports--$15.8 billion: crude oil. Major markets--Russia, France, Switzerland, China. Imports--$11 billion: agricultural commodities, medicine, machinery. Major suppliers--Egypt, Russia, France, Vietnam.
Economy of Iraq
Historically, Iraq's economy was characterized by a heavy dependence on oil exports and an emphasis on development through central planning. Prior to the outbreak of the war with Iran in September 1980, Iraq's economic prospects were bright. Oil production had reached a level of 3.5 million barrels per day, and oil revenues were $21 billion in 1979 and $27 billion in 1980. At the outbreak of the war, Iraq had amassed an estimated $35 billion in foreign exchange reserves.
The Iran-Iraq war depleted Iraq's foreign exchange reserves, devastated its economy, and left the country saddled with a foreign debt of more than $40 billion. After hostilities ceased, oil exports gradually increased with the construction of new pipelines and the restoration of damaged facilities. Iraq's invasion of Kuwait in August 1990, subsequent international sanctions, damage from military action by an international coalition beginning in January 1991, and neglect of infrastructure drastically reduced economic activity. Government policies of diverting income to key supporters of the regime while sustaining a large military and internal security force further impaired finances, leaving the average Iraqi citizen facing desperate hardships. Implementation of a UN oil-for-food program in December 1996 has improved conditions for the average Iraqi citizen. In 1999, Iraq was authorized to export unlimited quantities of oil to finance essential civilian needs including, among other things, food, medicine, and infrastructure repair parts.
The process of introducing a modern free market system to Iraq has begun. In September 2003, the Interim Finance Minister and the Governing Council announced significant economic and financial reforms issued by the CPA, particularly dealing with foreign direct investment, the banking sector, and the tax and tariff regimes.
Despite its abundant land and water resources, Iraq is a net food importer. Under the UN oil-for-food program, Iraq imported large quantities of grains, meat, poultry, and dairy products. Obstacles to agricultural development during the previous regime included labor shortages, inadequate management and maintenance, salinization, urban migration, and dislocations resulting from previous land reform and collectivization programs. A Ba'ath regime policy to destroy the "Marsh Arab" culture by draining the southern marshes and introducing irrigated farming to this region destroyed a natural food-producing area, while concentration of salts and minerals in the soil due to the draining left the land unsuitable for agriculture.
Efforts have begun to overcome the damage done by the Ba'ath regime in ways that will rehabilitate the agricultural sector and confront environmental degradation.
The United Nations imposed economic sanctions on Iraq after it invaded Kuwait in 1990. Noncompliance by Iraq with its UN obligations, particularly Iraq's refusal to allow weapons inspectors full freedom of action in dismantling Iraq's weapons of mass destruction program, caused those sanctions to remain in place until the Ba'ath regime was removed in 2003. Under the oil-for-food program Iraq was allowed to export oil and use the proceeds to purchase goods to address essential civilian needs, including food, medicine, and infrastructure spare parts. With the removal of UN sanctions, Iraq is returning to normal trade relations with the international community.