Shafaq News- Baghdad

Iraq’s economy is set to contract by around 6.8% in 2026, the International Monetary Fund (IMF) forecasted on Wednesday, citing rising tensions in the Middle East and pressure on energy markets as key drivers behind the outlook.

Despite the recent surge in international oil prices, which typically supports exporting economies, the IMF cautioned that these gains for Iraq may be offset by higher import costs and rising inflation. It added that this dynamic is likely to increase pressure on households and push up prices for essential goods and services.

The Fund also warned that a prolonged escalation could drive oil prices above $110 per barrel, complicating global efforts to contain inflation and prompting tighter monetary policy.

In previous reports, the IMF expected Baghdad’s economy to expand 3.6% in both 2026 and 2027. The pace is projected to strengthen further, reaching 3.9% in 2028 and 4.1% by 2029 and 2030.