Iraq's Economy Still Heavily Reliant on Oil, Diversification Debate Continues

BAGHDAD, Iraq — Iraq's economy remains heavily dependent on hydrocarbons, with oil accounting for 88% of government revenue, 91% of merchandise exports and 53% of real gross domestic product in 2025, leaving the country exposed to global price swings. World Bank and International Monetary Fund reports indicate that the break-even oil price needed to balance the budget has risen steadily over the years, while non-oil exports remain limited as Iraq imports a broad range of goods. Experts cited in domestic commentary point to diversification potential in food processing, chemicals, machinery and agriculture. They argue that value-added industrial sectors such as petrochemicals, fertilizers and food processing should handle raw materials domestically rather than exporting them unprocessed. The Development Road project and Al-Faw Port are being assessed not only as transport corridors but as potential economic hubs with surrounding industrial, storage and logistics facilities. In agriculture, specialists say international market access depends on quality standards, cold-chain infrastructure and modern packaging. Analysts note that a share of oil revenues should be directed to infrastructure, education and private-sector financing, and that the country's performance should eventually be measured by the global market share of its non-oil goods and services rather than by daily export volumes.