Iraq’s Foreign Trade and Its Development

Iraq’s economic situation has markedly deteriorated due to poor economic diversification and an increase in the degree of economic exposure. The economic activity components, such as the scarcity of commodity products, will inevitably lead to weakness in the domestic market's ability to meet the domestic demand. This will open the door to imports of goods to invade this market. Supported in financing the movement of such imports are being provided by oil exports of financial revenues. As a result, that process will negatively impact the country's trade balance and the value of local currency. The direct effects on cash reserves of hard currency held by the Country. The potential industrial and agricultural sectors are not commensurate with their counterparts in the countries' economies, which will lead to a lack of hope for the revival of the domestic industry and the advancement of the agricultural sector. The potential industrial and farming sectors are not commensurate with their counterparts in the countries' economies. The past decades of the Iraqi economy have proved that the dominance of the oil sector has not been reflected in positive results, and no structural changes have occurred in its structure. The increasing reliance on this resource has made the Iraqi economy constantly subject to price fluctuations in world oil markets, which has reflected directly on economic performance retraction and the worsening of the structural imbalances that create a state of financial instability. The analysis of Iraq's foreign trade structure showed a significant imbalance on the export side, as oil exports account for more than 95% of the total. As an average for the years of study, indicating the existence of an almost absolute commodity concentration increases the risk of instability of these exports. As for imports, it is clear that consumer goods control the most significant proportion of them, which reflects the weakness of the production orientation within the country. The country's trade balance also reflects the high degree of economic exposure. The results of the commercial exposure showed that it exceeded 40% for most of the study years, which reflects that the Iraqi economy is influenced by foreign trade and indicates the reliance on the outside resulting from the depth of the dependence of the local economy on the foreign markets to dispose of its exports, especially the crude oil, and consequently indicating the extent of sensitivity of the local economy for the external variables and the most prominent of which is the variation of prices.