Effective Economic Reform and its Impact on Poverty Reduction, Supporting Growth and Sustainable Development of the Iraqi Economy

Abstract

Iraq can, by and large, be classified as a single-sector dependent economy. Historically, crude oil and gas have brought ample revenue each year to finance the government budget. Until recently, high crude oil prices and revenues masked underlying weaknesses in Iraq’s public financial management (PFM) systems. With this high reliance on crude oil exports’ revenue, Iraq has suffered from decades of conflict as well as the impact of the COVID-19 pandemic, at recent years. After experiencing an oil price-driven growth spurt with a gross domestic product (GDP) growth rate of 7.6 percent in 2022, the economy contracted by 1.6 percent in 2024, as oil prices fell, and crude oil GDP declined by 6.2 in 2024. While the non-oil economy was growing by 4.2 percent during 2024. Accordingly, Iraqi economy facing quite a few challenges; amongst these challenges, are the apparent domination of the crude oil sector on the economy, relatively high poverty rate of about 18 percent, unemployment rate of 13.5 percent in 2024, as well as the presence of quite few economic and social impediments to promptly achieving the sustainable development goals (SDGs), in Iraq.

The principal objective of this paper is to shed light on the urgently required economic and fiscal reforms, and to analyse the impact of needed and duly implemented reforms on economic growth, sustainable development, poverty alleviation, and hence, the well-being of society at large. The research methodology used in preparing this paper was a mix of, amongst others, reviews of related literature, official economic institutions’ annual reports, desk work, utilizing previously done and published work by the authors, on the subject matter, and remotely discussions with some Iraqi leading economic institutions’ personnel.

It can be concluded that the real efforts of reforming the economic and fiscal aspect of the Iraqi national economy, as well as implementing the aimed at economic, fiscal and enabling environment reforms, besides eliminating the wide-spread corruption would, undoubtedly, contribute positively to alleviating poverty, increasing socio-economic prosperity, and achieving the sought after sustainable development goals (SDGs) in Iraq.

Keywords: Iraqi Economy, Economic Reform, Economic Diversification, Poverty Alleviation, Growth and Development, Sustainable Development Goals.

DOI: 10.7176/JESD/17-1-01

Publication date: January 30^th 2026