The International Monetary Fund reports that the improved security situation in Iraq is leading to significant improvements in oil production, and along with it, higher economic growth:
Mohsin Khan, the IMF’s director for the Middle East, said Iraqi oil production was forecast to climb by 200,000 barrels per day to 2.2 million barrels a day in 2008. “We are expecting much higher growth, and it is really coming from the fact that we expect oil production to be higher,” Khan told reporters. “We also think that the government will …if the security situation continues to improve … that the government will be able to fulfil its major investment plan in the oil and the non-oil sectors,” he added. He said the higher oil output would push gross domestic product growth significantly up to over 7 percent, possibly higher, in 2008 and 2009, from just 1.3 percent in 2007 when bitter sectarian violence drove the country to the brink of civil war.
Read the whole article. Khan says that Iraq’s economic growth for 2007 is likely to be revised upward, since the estimate is based largely on the first six months of the year–before the country saw dramatic improvement. Further, the growth estimate for 2008 is based on an estimated oil price of $57 per barrel–which seems pretty low. Also, Iraq’s currency reserves reached $27 billion in 2007–about 30 percent higher than had been projected. The Iraqi economy may wind up needing more cowbell.
