Iraq’s gross domestic product growth should rise to 9 percent in 2012 from around 6 percent currently, mainly driven by an expected increase in oil production and exports, a senior central bank official said on Sunday.
Iraq has some of the world’s largest oil reserves and is currently producing about 2.9 million barrels per day (bpd). High oil prices have helped the country earn billions of dollars more than projected this year.
‘It will easily jump to 9 percent next year, it will not be difficult. If production and exports in the oil sector rise, it is possible to reach that figure,’ Mudher Kasim, a deputy governor of Iraq’s Central Bank, told Reuters in an interview. Kasim said he expected GDP growth to sit at around 5-6 percent at the end of this year.
Iraq is slowly moving to rebuild its dilapidated infrastructure more than eight years after the US-led invasion, and needs investment in virtually every sector. Private industry remains relatively small compared with state-owned enterprises and the government is still the biggest employer. Iraq depends on oil exports for 95 percent of government revenue.
Iraq has signed deals with oil majors to boost production capacity to 12 million bpd by 2017, but Oil Minister Abdul-Kareem Luaibi said recently a plateau target of 8 million to 8.5 million bpd would be more suitable and the period could be extended to 13 or 14 years. Kasim said he also expected Iraq’s federal reserves to jump to around $70 billion by end-2012 from $58 billion currently if oil prices stayed at current levels and exports climbed as anticipated.
Brent crude settled down $2.17 at $109.91 on Friday while US crude dropped 64 cents to settle at $93.32. Last October, Kasim had put reserves at around $50 billion, with 45 percent held in dollars, 45 percent in euros and 10 percent mainly in gold and British pounds.
Kasim said the central bank had no plans to lower interest rates, currently at 6 percent, as that would spur more capital flowing out of the country.
‘I believe the interest rate is suitable because to decrease it more, the interest rate will become useless … it will help capital to go out (of the country),’ Kasim said.