Iraq’s economy is projected to shrink by 0.9 percent in 2025, according to the World Bank, marking a downward revision of 2.3 percentage points from earlier forecasts. The contraction mainly reflects reduced oil production as Iraq adjusts output to comply with OPEC+ agreements. Oil remains the backbone of Iraq’s economy, and these production limits directly affect government revenue and overall economic activity.
Despite the short-term contraction, Iraq’s growth outlook remains positive. The World Bank projects the economy will rebound strongly to 5.1 percent in 2026-2027 as output restrictions gradually ease. This recovery depends on both oil production increases and improved economic management.
The country has also achieved notable progress in reducing poverty since 2012. Yet, labor market inclusion continues to challenge Iraq, especially for women. Only 11 percent of women aged 15 and older participate in the workforce, one of the lowest rates in the region.
The World Bank survey identifies family responsibilities as the primary barrier to female employment, cited by 73 percent of firms. Restrictive legislation (61 percent) and a limited pool of female applicants (60 percent) also reduce opportunities. Over half of mothers (57 percent) report that childcare obligations prevent them from working.
Social attitudes compound these barriers. While 88 percent of Iraqis support women working, this support drops to 67 percent when childcare depends on others, and only 34 percent view leaving children with relatives as socially acceptable.
Additionally, Iraqi businesses face ongoing challenges. Political instability, corruption, and bureaucratic inefficiencies remain key obstacles. Within the World Bank’s BREADY framework, Iraq ranks in the bottom quintile globally for regulatory quality, public services, and operational efficiency. Employer obligations related to childcare further discourage hiring women with young children, reinforcing traditional gender roles.
Addressing these economic and social barriers will be crucial for Iraq’s long-term recovery. Policies that expand female labor participation, improve governance, and reduce reliance on oil revenue will support inclusive growth and help stabilize the country’s economy in the years ahead.