Baghdad (IraqiNews.com) – Iraq will be one of the economies most affected by regional turmoil in 2026, with major consequences for inflation rates and state budgets, according to a report issued by the International Monetary Fund (IMF).
The report mentioned that Iraq is among a small group of nations facing increased challenges due to the interruption of commercial movement and high costs of transportation, as well as the impact of military confrontations on trade exchange routes, particularly those that cross the Strait of Hormuz, Shafaq News reported.
These risks caused a significant drop in financial stability indicators compared to earlier estimates.
According to the IMF, Iraq and Iran faced the most severe fiscal and external balance strains among the region’s affected nations. Trade losses and a drop in economic activity exceeded any possible advantages from rising oil prices, resulting in a negative adjustment of their fiscal performance for 2026.
Iraq’s inflation forecasts have risen among Gulf Cooperation Council (GCC) countries, driven by increasing import costs and commodity prices. These increases varied from moderate levels in Iraq and certain GCC nations to higher levels in Iran, according to the report.
These developments highlight the Iraqi economy’s vulnerability to regional instability, particularly in terms of supply chains and foreign trade costs.
The report also anticipated that pressure on Iraq’s economy will continue in the coming months unless there is a breakthrough in the regional trade climate and an improvement in economic and financial stability.