“Moody’s” reduces the assessment of the economic strength of Iraq by two points to “ba2″.. What does that mean?

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“Moody’s” reduces the assessment of the economic strength of Iraq by two points to “ba2″ What does that mean

Recently, Moody’s downgraded Iraq’s economic strength to “ba2”. According to the assessment, this decision takes into account the country’s economy size and the abundance of natural resources, as well as the instability and turmoil of economic growth, weak infrastructure, and the lack of diversification in the economy.

According to a research paper released by The Corporation, Iraq’s creditworthiness has been analyzed and the final assessment shows a two-point drop in the country’s economic strength rating. This drop is attributed to the damage caused to Iraq’s productive capacity and infrastructure during years of armed conflicts. These conflicts have weakened the economy’s competitiveness and resilience, resulting in a slower growth rate and limited diversification outside of the oil and gas sector.

It has been noted by Moody’s that Iraq’s economy heavily relies on the oil sector, with it accounting for 45% of the nominal GDP in 2021. Additionally, Moody’s predicts that the country will not be able to reach pre-pandemic levels of economic output until 2024, despite the current economic recovery. It’s important to note that Iraq is one of the countries facing this challenge.

One of the biggest economies in the Middle East and North Africa region boasts a nominal GDP of $264 billion in 2022. However, the economy heavily relies on oil production and prices, making it highly sensitive to fluctuations. Unfortunately, experts predict a sharp decline in 2023.

According to Moody’s, the Iraqi economy grew by 8.1% last year, thanks to a 12.7% increase in crude oil production, which reached around 4.5 million barrels per day. However, Moody’s predicts that the economy will grow at a slower rate in 2023-2024 due to stable oil production rates and weak growth in the non-oil sector. Moody’s also noted that oil export revenues amounted to $115.6 billion last year, which is 44% of the gross domestic product, representing a 53% increase from the previous year.

It is anticipated that the Corporation will experience a decrease in real GDP growth in Iraq to under 2% this year, despite the potential for a rebound in the non-oil sector with the help of public spending until 2024. Iraq will voluntarily decrease its oil production by 211 thousand barrels per day beginning in May until the conclusion of 2024, in accordance with OPEC agreements made in April and May.

There was a disruption in the transportation of oil field exports from northern Iraq to Turkey during the second quarter of this year. This was due to a pipeline between the ports of Kirkuk and Ceyhan being disrupted, which also affected the country’s oil exports.