Iraqi Market Embraces 18.3% of Iran's Total Exports

In a reflection of the blossoming economic relations between Iraq and Iran, reports indicate that the bilateral trade balance is projected to reach a staggering $20 billion. The evolving economic sectors between the two nations signify the potential for achieving this trade exchange in the coming years.

Yahya Al-Eshaq, the head of the joint Iran-Iraq Chamber of Commerce, highlighted that Iraq is poised to become the leading investment destination in the region over the next decade. He stated, "Those taking initiative to establish a presence in Iraq now will undoubtedly reap the benefits."

Adding to this sentiment, Hamid Hosseini, a member of the joint chamber, noted that with the Iraqi government's recent budget approval and the initiation of various projects, there's an anticipated surge in exports to Iraq compared to the previous year. Recent data underpins this assertion: Iran's exports to Iraq in the first five months of the current Iranian year (starting March 21, 2023) stood at $3.508 billion, making up 18.3% of Iran's total exports.

To contextualize, in 2021, Iraq's trade volume was approximately $148 billion. A significant portion, $87 billion (or 59%), was tied to exports, while $61 billion (41%) was associated with imports. An analysis of Iraq's trade trends over the past decade shows a consistent prominence of exports, predominantly oil-driven, over imports. However, the import sector has shown relative stability.

The UAE, China, and Iran emerge as Iraq's principal trade partners. In 2021, Iran captured 14.6% of the Iraqi market, exporting goods worth $8.9 billion, marking its best position since 2018 when it held approximately 16.7% of the said market.

Given Iraq's trade policy focus on attracting foreign investments, bolstering the private sector's activities, and reducing oil export reliance, Iran must strategize to expand its collaboration in these domains with Iraq.

The trade dynamics between Iran and Iraq, although favoring Iran, are imbalanced. This disproportion stems from Iraq's non-diverse and unstable economic infrastructure. This imbalance might jeopardize the sustainability of their bilateral trade, suggesting that Iran needs to recalibrate its approach. Considering joint investments with Iraq might be a step in the right direction.