The wealth of fossil fuels is the basis of the Iraqi economy. 95% of public revenues derive from selling oil and gas. Falling oil prices have led to a drop in state revenues, while government debt amounted to around 76% of Gross Domestic Product in 2016. The drop in oil prices and occupation of large parts in the Northwest of the country by the IS has had a severe impact on the country´s economic output, which dropped to -2.4 in 2015. In 2016 there was an increase of economic output that is expected to continue in 2017.
There is still backlog demand in the areas of transport infrastructure, IT structures, energy supply, education and health, as well as in residential building. The partially difficult security situation, especially in the center of the country, still remains an obstacle foreign countries and investors. However, a growth outside the petroleum sector and a growth in economic performance and activities are expected, if the current fight against IS remains successful and planned structural reforms for development of the private sector and diversification of the economy will be implemented.
German-Iraqi economic relations have been on a low level as a result of the war in 2003. A drop in German exports to Iraq is being observed since 3 years. After German exports climaxed in 2013 to approximately 1.4 Billion Euros, exports are expected to drop again below 1 Billion Euros. However, after the liberation of Mosul and the improvement of the economic situation, exports are expected to grow again. German exports consist of machines, vehicles, electro technical and chemical products as well as hardware. Iraq´s main suppliers remain Turkey and Asia.