Political security risks have moderated following victories over Islamic State but have been replaced by Kurdish tensions. Economic growth is still at risk while Iraq is a difficult place to do business in.
Economic risk (HIGH): The outlook for growth is for a milder recession followed by modest growth as the non-hydrocarbon economy looks to fill the gap left by oil.
Political risk (HIGH): The expulsion of Islamic State will enable the government to focus on reform as long as it can handle tensions in Kurdistan. Iraqi citizens are angry at the lack of reform progress and coming elections may allow them to express anger.
Financial risk (HIGH): The government’s fiscal and external balances are vulnerable to continued low oil prices. There is a risk of bank bailouts endangering sovereign solvency.
Commercial risk (HIGH): Opaque and stifling bureaucracy makes Iraq one of the world’s hardest places to do business. The central bank has offered $5bn of SME credit lines.