Blogs & Comment

Iraq’s medium-term prospects are looking bright

Ali Al Saffar is Iraq editor at the Economist Intelligence Unit

“One of the most potent reminders that things have changed in Iraq is the mushrooming of independent newspapers, magazines and television channels in the country. There are currently an estimated 50 local television channels and 200 newspapers and magazines, while the impressive growth in internet coverage means that Iraqis can, and emphatically do, access a wide range of international publications. It is easy to forget that just seven years ago, mobile phones, satellite television and radio stations, and most crucially, the internet, were all forbidden to normal Iraqis, who have now greeted these modern modes of communications and media with open arms. This will prove to be crucial in forming future consumer perceptions and habits.

The consumer market in Iraq is still underdeveloped – it is yet to recover from the decade of sanctions and, of course, the latest war. But it is growing, and as the private sector grows more dynamic, aided by the huge influxes of oil revenues forecast in the next decade (and the subsequent increase in government spending and private consumption), the prospects for consumer markets are good. The re-emergence of an all important middle-class after its annihilation at the hands of sanctions-induced hyper-inflation in the 1990s will provide the primary agent for consumer spending. As consumers spend more, and the market grows, so will competition for their custom. In the medium to long term, advertising will play a crucial role in this healthy market.

In a recent interview with the Kurdish Globe, an Iraqi newspaper, Ameed Hassan Ahmed, the chairman of Raman General Trading Company Ltd. (which is the exclusive distributor of Toshiba Electronics and Home Appliances in Iraq), said that his company allocated between 2 and 4 per cent of its total annual revenues to marketing. Although the relative stability of the Kurdish provinces means that the region’s private sector is considerably more vibrant than that in the rest of the country, it remains a useful indicator of the way things are likely to unfold.

Advertising is, as yet, a very limited sector in Iraq, but much like practically all sectors in Iraq, the fundamentals for growth are there. The Economist Intelligence Unit forecasts that Iraq’s economy will grow by an average of 6.3 per cent over the next two years. Increased oil production and a relatively strong oil price will mean that the central government will be well placed to spend not only on its employees’ salaries but on capital projects. As enterprising global companies enter the market, local companies will learn from their approaches to marketing and will capitalise on this to stay competitive. The sum of these factors means the medium to long-term prospects for the industry are bright in Iraq.”