IMF projects Iraq’s economy to contract by 16% in 2026

The International Monetary Fund. Photo: AFP Baghdad (IraqiNews.com) – The International Monetary Fund (IMF) forecasts a 16 percent contraction in Iraq’s real GDP in 2026, followed by a 19 percent growth in 2027, according to statistics from the October 2026 World Economic Outlook report. Estimates indicate rising inflation and a widening current account deficit in 2026. Iraq’s economy fell by 0.4 percent in 2025. Meanwhile, the IMF forecasts a 3.5 percent inflation rate in 2026, compared to 0.3 percent in 2025, before falling to three percent in 2027. The IMF predicts Iraq will have a deficit of 10.8 percent of GDP in 2026, up from 3.8 percent in 2025, before moving to a 2.2 percent surplus in 2027. According to these predictions, Iraq is one of the region’s oil-exporting economies that will decline in 2026; the numbers show a 3.8 percent contraction for these oil exporters, followed by 7.4 percent growth in 2027. According to the analysis, Saudi Arabia’s real GDP would fall by 3.3 percent, the UAE’s by 3.9 percent, Qatar’s by 15.6 percent, and Kuwait’s by 16.7 percent in 2026, before rising again in 2027. Figures for Iraq show a sharp contrast between the 2026 and 2027 predictions, with the economy transitioning from severe decline to solid growth—according to the IMF. The projected growth in 2027 does not imply an increase in living standards or household financial situations, as these metrics are still dependent on other factors such as employment possibilities, income levels, inflation, and public finance performance.