“Moody’s” reduces the assessment of the economic strength of Iraq by two points to “ba2″.. What does that mean?
“Moody’s” reduces the assessment of the economic strength of Iraq by two points to “ba2″.. What does that mean?
2023-07-21
Moody’s announced the downgrade of Iraq’s economic strength to “ba2″, and said that this assessment balances the size of the economy and the abundance of natural resources with the instability and turmoil of economic growth, weak infrastructure, and the economy’s lack of diversification.
The Corporation said, in a research paper that provides an annual analysis of Iraq’s creditworthiness, that the final assessment dropped Iraq’s economic strength rating by two points from the “baa3″ level, which reflects the damage to the country’s productive capacity and infrastructure through several years of armed conflicts, which weakened the competitiveness and resilience of the economy, impeded its ability to grow at a faster rate, and hindered diversification outside the oil and gas sector.
Moody’s also indicated the heavy dependence of Iraq’s economy on the oil sector, which accounted for 45% of the nominal GDP in 2021. Moody’s also expected that the country would not be able to return to the levels of economic output that prevailed before the Corona pandemic before 2024, despite the current recovery of the economy, and despite Iraq having one of the
largest economies in the Middle East and North Africa region with a nominal GDP of $ 264 billion in 2022. And she said, The growth of the economy is highly sensitive to oil production and prices, and is expected to decline sharply in 2023. Heavy dependence
While Moody’s estimates the growth of the Iraqi economy last year by 8.1%, supported by an increase in crude oil production by 12.7% to about 4.5 million barrels per day. It had expected the economy to grow at a slower rate than that in 2023-2024, with stable oil production rates and weak growth rates in the non-oil sector. It indicated that oil export revenues last year amounted to $115.6 billion (representing 44% of the gross domestic product), an increase of 53% over the previous year’s level.
The Corporation expected a decline in real GDP growth in Iraq to less than 2% this year, despite the possibility of a recovery in the non-oil sector, supported by public spending until 2024. Iraq will voluntarily reduce its oil production by 211 thousand barrels per day, starting from May until the end of 2024, according to OPEC agreements in April and May
.
The country’s oil exports were also disrupted in the second quarter of this year due to the disruption of a pipeline between the ports of Kirkuk and Ceyhan, which transported oil field exports from northern Iraq to Turkey.
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