World Bank: Iraq's reconstruction needs are estimated at $88 billion.

The World Bank published its forecasts and estimates for the Iraqi economy for 2018. Positive indicators dominated the outlook despite warnings of the fragility of the situation due to looming risks.

Population and Poverty Rates
The population of Iraq is 38.5 million, and the total GDP is $197.7 billion. The poverty rate, according to the poverty line set at $3.2 per day, is 17.9%, while the rate rises to 57.3% when considering an income of $5.5 per day. However, the national poverty line has been set at 22.5%. The average age in Iraq is 69.6.

Growth Acceleration
The report expects the pace of growth for the Iraqi economy to accelerate due to improved security conditions, with a recorded growth of 4.4% in the non-oil sector in 2017, despite the slowdown in reconstruction activities due to the repercussions of war and falling oil prices. There are hopes pinned on structural economic reforms and addressing the displacement issue, as 10% of Iraqis still suffer from displacement.

Reconstruction Needs
The reconstruction needs of Iraq are estimated at $88 billion, but positive indicators slightly dominate the situation according to the report, as inflation recorded a low rate of 0.1% in 2017 and the overall budget deficit decreased to 2.2% last year.

Public Debt
Improved financial outcomes helped stabilize public debt in 2017 after an increase due to borrowing and the issuance of debt guarantees, where the debt-to-GDP ratio remained at 64% in 2016, for example. Foreign exchange reserves began to increase in 2017 to face external shocks.

Unemployment and Labor Force
Labor market statistics indicate further deterioration in poverty conditions, as the youth participation rate among those aged 15-24 has seen a noticeable decline, and the unemployment rate has nearly doubled in provinces affected by violence related to ISIS and displacement, recording 21% compared to 11% in other provinces.

Future Prospects
The World Bank expects that growth prospects in Iraq will improve thanks to a favorable security environment and the gradual recovery of investment for reconstruction amid forecasts of GDP growth despite the OPEC production cut agreement that obliges Iraq to comply.

Risks and Challenges
The risks threatening growth in Iraq include the possibility of escalating political tensions and the potential for terrorist attacks that could undermine medium-term future prospects. In the long term, there are looming risks such as the possibility of fluctuating oil prices, failure to improve the security environment, and the lack of implementation of the significant measures expected to reform public finances and contain current expenditures, as well as the failure to prioritize investment in reconstruction. Public debt also remains vulnerable to shocks from a decline in oil prices or a drop in the real exchange rate of the dinar.