Iraq faces growing economic strain due to Israel-Iran conflict
Dr. Nawar al-Saadi, a professor of international economics, told Shafaq News that Iraq's geographic location, heavy reliance on oil, and integration into a sensitive regional network leave it vulnerable to the fallout of the escalating hostilities.
'So far, we're seeing three immediate economic consequences,' al-Saadi explained. 'First, the Iraqi dinar is weakening as the dollar exchange rate rises. This reflects fears that the conflict could spread, affecting oil exports or state revenues, which in turn fuels inflation through higher import costs.'
The second impact, he said, is market stagnation. 'Uncertainty is freezing investment and commercial activity. Wars interrupt economic planning and scare off capital, especially when Iraq is seen as part of a high-risk geopolitical zone.'
According to al-Saadi, the increase in food prices is another impact, 'Concerns over supply chain disruptions have already prompted speculative behavior and hoarding among traders. This poses a direct threat to Iraq's food security, which is already fragile due to high import dependence.'
The professor warned that if the conflict intensifies or persists, the consequences could become 'far more severe.'
'Iraq's oil exports rely almost entirely on the Gulf, particularly the Strait of Hormuz. If that route is disrupted, even briefly, Iraq could lose billions in revenue and plunge into a financial crisis its oil-dependent budget cannot withstand.'
Al-Saadi also highlighted the risk of domestic instability, pointing out that the longer the war drags on, the greater the chance that regional power struggles will spill into Iraq. 'If foreign interests or US assets are targeted, or southern cities become flashpoints, it could erode what's left of Iraq's economic stability.'
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