Boston, MA -- (SBWIRE) -- 11/26/2014 -- Due to the ongoing deterioration of security in Iraq following the rise of Islamic State (IS) we substantially lowered our real growth forecasts for the construction sector last quarter. IS is now in control of large swathes of Iraq's north and west, and while the threat to the oil industry is minimal, the ongoing political and security unrest remains a significant hindrance to Iraq's future. Ongoing delays in the formation of a new government and an inability to agree a 2015 national budget are further hindrances to potential growth.

Key Developments:

- We are currently maintaining our forecasts for growth in Iraq's construction industry at an average rate of 5.2% per year through to 2023.
- Following months of delay after the April 2014 elections, a new government was formed in September 2014. The focus of new Prime Minister Haider al-Abadi, who still faces an uncertain political environment, will undoubtedly be dealing with the threat posed from IS.
- While IS fighting is not occurring directly in major urban areas in Kurdistan, the conflict will impact upon investment in the area which had been a source of stability and strength in Iraq's construction sector, creating a significant downside risk to our forecasts for 2015.
- Baghdad continues to award construction contracts for major infrastructure projects, with reports suggesting USD172mn would be allocated for road, electricity and sanitation development.
- The energy and utilities sector continues to see government investment: the government of Dhi Qar province reportedly intends to invest IQD500bn (USD430mn) in power projects over the next three years in order to relieve power shortages.

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