Iraq's growth in 2013 was stable but moderate, despite disruptions in oil production due to adverse security conditions, bad weather and export infrastructure deficiencies. Growth was driven by the non-oil sector primarily, particularly construction and retail trade. Overall growth of the economy in 2013 was 4.2% with the non-oil sector growing 7%. Inflation declined slightly to 3.1% from 3.6% the previous year and international reserves grew by $7 billion to $78 billion during the year.Â The growth forecast for 2014 is more optimistic with the expectation of increased oil production. Over the next few years Iraq is expected to be one of the fastest growing oil suppliers to the global market. Iraq's 2014 budget targets oil production to increase to 3.4 million barrels per day including output from the Kurdistan region as part of an overall strategy to increase oil production to 9 million barrels per day by 2020. The budget also envisions large spending outlays in security, social assistance and pensions and transfers to the provinces. If security doesn't significantly worsen and the planned budget is executed the 2014 growth forecast for Iraq is more than 6%.
Iraq holds an estimated 12% of the world's proven petroleum reserves but has left them mostly unexploited due to lack of investment and insecurity. Still, Iraq produces about 2.6 million barrels per day, the source of about 70% of the economy and 95% of government revenues. Continuing conflict and endemic corruption, however, has hampered other Iraq's other industries. Tax inspections, utility payments, contract awards are routinely accompanied by demands for bribes. Financing and land are inaccessible to most firms seeking to do business in Iraq only 7% have loans and state-owned enterprises compete with the private sector. Agriculture, once Iraq's second largest sector after oil and employing 25% of all employment, has long been thought to be Iraq's best chance to diversify its economy. Yet, only 58% of irrigable land is used in Iraq, accounting for only 2-4% of GDP. Iraq, once a breadbasket for the Middle East, now imports 80% of its food. Transportation is another opportunity for investment. Currently Iraq's port in Basra handles 35 million tons of cargo bound to Syria, Turkey and Europe. The port could possibly handle nearly twice that amount and a new port at Al-Faw peninsula on the Persian Gulf could potentially reach a capacity of 99 million tons. Security allowing, Iraq's roads could also link markets in Iran, Turkey, Jordan, and Yemen. Tourism has long been hampered by security, but as annual Shiite pilgrimages have shown even during the most violent years of civil war, there would be no shortage of potential visitors in a stable Iraq. Visits have already increased in secure areas in Iraq's semi-autonomous Kurdish region in the north of the country. Construction will also be a steady growth area as the economy recovers and attempts to close massive housing shortfalls. Over $14 billion in real estate and $6.7 billion in infrastructure deals are already committed with plans to invest total government funds of $37 billion into infrastructure.
Iraq's overall doing business ranking (ranked 151 out of 189 economies) increased in 2014, compared to 2013 figures by 4 ranks. This is due to a significant improvement of access to electricity (39) and gaining construction permits (20). The worst aspects of doing business in Iraq is resolving insolvency (189), getting credit (180), trading across borders (179) and registering property (108). Paying taxes is relatively easy with a rank of 63. Iraq ranks 17 in the region in terms of doing business, one rank above Iran.