Baghdad: Escalating regional tensions in the Middle East are weakening the Iraqi economy, which still relies almost entirely on oil revenues to finance public spending.
According to Qatar News Agency, despite Iraq possessing one of the world's largest oil reserves, its economy remains based on a single-source rentier model, highly susceptible to global market fluctuations and supply disruptions, with oil accounting for more than 90% of state revenues. These place public finances in constant confrontation with external shocks that are difficult to contain in the absence of effective economic diversification and the continued volatility of global prices.
Spokesman for Iraq's Ministry of Planning Abdul Zahra Al Hindawi said in an exclusive statement that more than 90% of the country's revenues come from oil, which makes Iraq's economy fragile and vulnerable to external shocks related to price fluctuations or supply disruptions. He stressed that the rentier path puts the Iraqi economy in danger, as it keeps it vulnerable to fluctuations, in the absence of real alternatives capable of supporting oil revenues.
He added that these risks are no longer hypothetical but have become clearly evident during the current regional tensions, where disruption to oil exports has led to a sharp decline in revenues, causing deep financial crises that have threatened the state's ability to meet its obligations, including securing the salaries of millions of employees.
For his part, Financial Advisor to the Iraqi Prime Minister Mazhar Mohammed Saleh confirmed to QNA that the government is moving towards expanding the base of local production by supporting the agricultural and industrial sectors and enhancing the role of the private sector in absorbing the workforce and reducing dependence on oil as a primary source.
Current economic policies focus on revitalizing the agricultural and industrial sectors as two essential pillars for creating job opportunities, he said, explaining that the agricultural track includes supporting grain production by purchasing crops at prices exceeding global levels, in addition to providing production inputs and implementing the agricultural calendar to protect local produce.
He added that the government is working in parallel to support the industrial sector through a package of measures that include allocating industrial lands, providing fuel, and facilitating the import of modern technology, as well as activating financing initiatives to support the operation and expansion of national factories, especially in the private sector.
In turn, economist Manar Al Obaidi explained to QNA the essence of the economic crisis in Iraq lies in the inability to create real production outside the oil sector, noting that the per capita share of actual production is still low, which puts the country among the poorest in terms of productivity.
He stressed the need to adopt a package of strategic measures to get out of this spiral, including privatizing the banking sector to operate according to the logic of investment and development financing, and supporting major productive projects capable of exporting and competing.
Al Obaidi called for transforming the tourism and services sectors into sustainable economic resources, facilitating the business environment to attract investments, as well as activating trade diplomacy and imposing an equation based on investment and local production instead of being satisfied with the role of the consumer market.
Regarding diversifying income sources, economist Nabil Al Marsoumi told QNA that diversifying income sources is not a political option but an existential necessity for the Iraqi economy. He said that getting out of what he described as the 'rentier economy crisis' requires building a multi-pillar economy by activating the agriculture, industry, services, and tourism sectors and investing oil revenues instead of consuming them on salaries.
Al Marsoumi criticized the government's excessive reliance on imports, calling for the reactivation of stalled government factories, support for the private industrial sector, and the imposition of fees to protect local products.
Official research reports issued by specialized government organizations (particularly those issued by the Ministry of Planning and the Central Bank) stated at the beginning of 2026 that there is an inevitable need to diversify sources of income in Iraq, given that the economy depends on oil revenues by more than 90%, which makes it vulnerable to financial risks when prices fluctuate.