In recent studies, it has been revealed that the contrast between the real life and the business is extreme in the country. In a way this was expected in the country as it has been a saga of continuous disputes and war situations, which have driven the country towards utter misery. The infrastructure within the country has been collapsed very severely. This is the reason that Iraqi citizen are facing hard time within the country, suffering from the scarcity of electricity, security and joblessness. Though, on the other hand, the business field of the country is blooming dramatically. Large and medium foreign companies are coming to the country, with quality inputs, providing the country a fresh new start and a dream for becoming one of the future economical giants of the world. The proven oil reservoirs of the country are the assets for it.
Recently, the banking sector in Iraq has also shown quite a steady leap. Citibank which is one of the largest banking institutions throughout the world has shown its interest to join the Iraqi market. “U.S. companies, such as Citi, are demonstrating tremendous commitment to Iraq. Our companies bring capital and expertise, world-leading technology, and innovative management and financing practices,” stated Stephen Beecroft, the United States ambassador to Iraq, at a reception June 26, 2013, according to Iraq Business News.
He also added, the bank has a plan to open its first branch in Baghdad, where the bank is interested to invest around 1 trillion USD for development of the banking infrastructure. This has been seen as a significant project for the Iraq by the experts. So far, some other foreign banks, like – Standard Chartered has shown its interest in Iraq and committed to open its branches in the country. However, the investment amount that has been announced by the Citi Group can be considered as a record amount, which is a milestone for the banking sector of Iraq.
Mayank Malik, chief executive officer for Citigroup for Jordan, Iraq, Syria, and the Palestinian territories told, “Iraq is a giant that’s waking up and the opportunities are immense … The most significant opportunities are twofold—oil revenue generation and infrastructure creation. We estimate this to be a $1 trillion initiative over time.”
The economy of Iraq is oil centered, which is known to all. But the country is recently looking forward to some other business setups so that oil leniency can become a bit lesser. According to the International Monetary Fund (IMF), the country has the second largest oil reserves in the world. An estimated 143 billion barrels are in the ground in Iraq; the country produced 3.1 million barrels per day in 2012. According to the Ministry of Oil of Iraq, it has been stated that 2.1 million barrels per day was the export of the country in last few months.
Iraq has made a lot of investments for enhancing its oil infrastructure. Many foreign companies have participated in the development process of Iraq, in which a lot of oil majors of the world are involved. The overall development process has been positive so far as total GDP growth of the country is estimated to be 9 percent by the end of this year. According to the IMF, the growth is even higher than the global average growth. In turn, the government has increased budget spending by 18 percent to $118 billion.
It has been also stated by IMF that the development in other sectors and Iraqi social infrastructure development will result in a better business environment. Presently, health, education and security – these are three concerns for the country, which need to be overcome soon so that optimum growth in the country can take place.
On the other hand, international banking organizations are showing interests in Iraq for their business expansion in this part of the world. According to Singapore-based Sansar Capital Management LLC, the five largest private banks in Iraq increased their net-income by more than 200 percent from 2010 to 2012.
Foreign banks, like – Standard Chartered and Citibank will invest in Iraq and it has been announced by these banks that they will open their outlets soon in Baghdad, Basra and Erbil. “The amount of economic activity in Iraq now is substantial. We always wanted to be onshore in Iraq. It was never a question of if but a question of when.” - stated by regional head Christos Papadopoulos of Standard Chartered.
Despite of the growth and so many positive aspects, IMF’s warning to Iraq has to be remember too, which illustrates – “Iraq’s economic prospects continue to be subject to significant risks, deriving mainly from institutional and capacity constraints, oil prices volatility, delays in the development of oil infrastructure, and an extremely fragile political and security situation.”