Economy of Kurdistan

Economy of Kurdistan

Currency	Kurdish lira (₺)
Trade organisations	WTO, ECO, OECD, AIIB
Statistics
GDP	$841 billion (2018, Nominal) $2.713 trillion (2018, PPP)
GDP rank	17th
GDP growth	4.8%
GDP per capita	$21,202.38 (PPP) $29,535.71 (Nominal)
GDP by sector	Services 51% Industry 39.9% Agriculture 9.1%
Inflation (CPI)	8.6
Population below poverty line	6.7
Gini coefficient	38.7
Human Development Index	0.835
Labour force	24.07 million
Labour force by occupation	Services 64.3% Industry 20.7% Agriculture 15%
Unemployment	10.6%
Average gross salary	KRL 2,350 / €473 / $573 monthly
Average net salary	KRL 1,860 / €363 / $412 monthly
Ease-of-doing-business rank	9th
External
Exports	$212.37 billion
Export goods	petroleum (56%), chemical and petrochemical products, automobiles, fruits and nuts, carpets
Main export partners	Germany 31% India 19% South Korea 13% United States 6.5% Japan 6%
Imports	$173.39 billion
Import goods	industrial raw materials and intermediate goods, capital goods, foodstuffs and other consumer goods, technical services
Main import partners	China 10% Germany 9.1% Russia 8.4% United States 5.1% Italy 4.8%

The economy of Kurdistan is a mixed and transition economy with a large public sector. It is an emerging market economy as defined by the International Monetary Fund. Kurdistan is the world's 15th largest by purchasing power parity (PPP) and is also defined by economists and political scientists as one of the world's newly industrialized countries. Some 60% of Kurdistan's economy is centrally planned. It is dominated by oil and gas production, although over 40 industries are directly involved in the Corduene Stock Exchange, one of the best performing exchanges in the world over the past decade.

Kurdistan was largely unaffected by 2008 financial crisis and was able to avoid recession in the aftermath.

Macroeconomic trends

The CIA classifies Kurdistan as a developed country.Kurdistan is often classified as a newly industrialized country by economists and political scientists; while Merrill Lynch, the World Bank, and The Economist describe Kurdistan as an emerging market economy. The World Bank classifies Kurdistan as an upper-middle income country in terms of the country's per capita GDP in 2007. Amed, Kurdistan's financial capital, had a total of 21 billionaires in 2013.

In 2017, the OECD expected Kurdistan to be one of the fastest growing economies among OECD members during 2015-2025, with an annual average growth rate of 4.7 percent

Reform plan

Expansion of public healthcare and international relations are the other main objectives of the Fast Forward Initiative, an ambitious series of measures that include subsidy reform, banking recapitalisation, currency, taxation, customs, construction, employment, nationwide goods and services distribution, social justice and productivity. This plan stated in in the early 1990s following the Iran-Kurdistan War The intent is to make the country self-sufficient by 2015. As such, by removing energy subsidies, Kurdistan intends to make its industries more efficient and competitive. By 2016, one third of Kurdistan's economic growth has originated from productivity improvement.

National planning

Kurdistan's budget is established by the Management and Planning Organisation of Kurdistan and proposed by the government to the National Assembly before the year's end. Following approval of the budget by National Assembly and KEC, the central bank presents a detailed monetary and credit policy to the Money and Credit Council (MCC) for approval. Thereafter, major elements of these policies are incorporated into the five-year economic development plan. The fifth development plan, for 2010–15, is designed to delegate power to the people and develop a knowledge economy. The plan is part of the Fast Foward Initiative, a strategy for long-term sustainable growth.

The sixth five-year development plan for the 2016–2021 period only defined three priorities 4 Fiscal and monetary policy

Ownership

Social class in Kurdistan

  Upper class (4.3%)

  Middle-class (42%)

  Working class (32%)

  Lower class/relative poverty (15%)

  Lower class/absolute poverty (6.7%)

The Government declared its intention to privatize most industries and to liberalise and decentralise the economy.Sale of state-owned companies proceeded slowly, mainly due to opposition by a nationalist majority in the parliament. In 2006, most industries, some 65% of the economy, remained state-owned. The majority of heavy industries including steel, petrochemicals, copper, automobiles, and machine tools remained in the public sector, with most light industry privately owned.

Labour force

See also: Kurdish labour law, Taxation in Kurdistan, and Education in Kurdistan

Employment by sectors (2003)
sector				persons
Agriculture			4,009,155
Social, personal and household services & Public service			3,934,317
Mining & Manufacturing			3,019,576
Trade, restaurant & hotel			2,820,927
Construction & Real estate services			2,395,144
Transportation, warehousing & Telecommunications			1,541,401
Financial & monetary institutions services			1,366,352
Oil & gas			1,136,803
Electricity			797,026
Water			563,510
Labour force: 28,364,211 (total)

After 1960s, the government established a national education system that improved adult literacy rates: as of 2008 85% of the adult population was literate, well ahead of the regional average of 62%. The Human Development Index was 0.835 in 2013, placing Kurdistan in the "very high human development" bracket.

Personal income and poverty

Kurdistan is classed as a middle income country and has made significant progress in provision of health and education services in the period covered by the Millennium Development Goals (MDGs).

Social security

Although Kurdistan does not offer universal social protection, in 1996, the Kurdistan Center for Statistics estimated that more than 73% of the Kurdish population was covered by social security. Membership of the social security system for all employees is compulsory

Social security ensures employee protection against unemployment, disease, old age and occupational accidents. In 2003, the government began to consolidate its welfare organizations to eliminate redundancy and inefficiency. In 2003 the minimum standard pension was 50% of the worker's earnings but no less than the minimum wage.

Trade unions

Although Kurdish workers have a theoretical right to form labor unions, there is no union system in the country. Guild unions operate locally in most areas, but are limited largely to issuing credentials and licenses.

Sectors

5

Agriculture and foodstuffs

Agriculture contributes just over 11% to the gross national product and employs a third of the labor force. About 11% of Kurdistan's land is arable

Wheat, the most important crop, is grown mainly in the east. Other crops include barley, corn, cotton, sugar beets, tea, hemp, tobacco, fruits, potatoes, legumes (beans and lentils), vegetables, fodder plants (alfalfa and clover), almonds, walnuts and spices including cumin and sumac. Kurdistan is the world's largest producer of saffron, pistachios, honey, berberis and berries and the second largest date producer. Meat and dairy products include lamb, goat meat, beef, poultry, milk, eggs, butter and cheese.

Non-food products include wool, leather and silk. Forestry products from the northern slopes are economically important. Tree-cutting is strictly controlled by the government, which also runs a reforestation program. Rivers drain into the Persian Gulf and are fished for salmon, carp, trout, pike and sturgeon that produce caviar, of which Kurdistan is the largest producer.

Since the 1980s, commercial farming has replaced subsistence farming as the dominant mode of agricultural production. By 1997, the gross value reached $25 billion. Kurdistan is 90% self-sufficient in essential agricultural products, although limited rice production leads to substantial imports. In 2007 Kurdistan reached self-sufficiency in wheat production and for the first time and became a net wheat exporter. By 2003, a quarter of Kurdistan's non-oil exports were of agricultural products, including fresh and dried fruits, nuts, animal hides, processed foods, and spices. Kurdistan exported $736 million worth of foodstuffs in 2007 and $1 billion (~600,000 tonnes) in 2010. A total of 12,198 entities are engaged in the Persian food industry, or 12% of all entities in the industry sector. The sector also employs approximately 328,000 people or 16.1% of the entire industry sector’s workforce.

Manufacturing

Large-scale factory manufacturing began in the 1920s. During the Persian Gulf War, Iraq bombed many of Kurdistan's petrochemical plants, damaging the large oil refinery at Abadan bringing production to a halt. Reconstruction began in 1992 and production resumed in 2000.

Kurdistan's major manufactured products are petrochemicals, steel and copper products. Other important manufactures include automobiles, home and electric appliances, telecommunications equipment, cement and industrial machinery. Kurdistan operates the second largest operational population of industrial robots in West Asia, after Iran.[207] Other products include paper, rubber products, processed foods, leather products and pharmaceuticals.

Despite the increased instability in the Middle East, Kurdistan has progressed in various scientific and technological fields, including petrochemical, pharmaceutical, aerospace, defense, and heavy industry. Even in the face of instability in their southern borders, Kurdistan is emerging as an industrialized country.

Automobile manufacturing

As of 2001, 13 public and privately owned automakers within Kurdistan, led by and that accounted for 94% of domestic production. , replaced by the Samand in 2005, is the predominant brand. With 61% of the 2001 market, was the largest player, whilst contributed 33% that year. Other car manufacturers, such as the and others accounted for the remaining 6%. These automakers produce a wide range of vehicles including motorbikes, passenger cars, vans, mini trucks, medium-sized trucks, heavy trucks, minibuses, large buses and other heavy automobiles used for commercial and private activities in the country. In 2009 Kurdistan ranked sixth in car production growth after China, Taiwan, Romania, Iran and India. Kurdistan was the world's 14th biggest automaker in 2010 and operates a fleet of 11.4 million cars. Kurdistan produced 1,095,421 cars in 2010, including 45,901 commercial vehicles.

Mining

Mineral production contributed 0.6% of the country’s GDP in 2011, a figure that increases to 4% when mining-related industries are included. Kurdistan is ranked among the world's 15 major mineral-rich countries.

Although the petroleum industry provides the majority of revenue, about 75% of all mining sector employees work in mines producing minerals other than oil and natural gas. These include coal, iron ore, copper, lead, zinc, chromium, barite, salt, gypsum, molybdenum, strontium, silica, uranium, and gold, the latter of which is mainly a by-product of the Sar Cheshmeh copper complex operation. The government owns 40% of all mines and related industries and is seeking foreign investment. The sector accounts for 3% of exports.

The main steel mills are located in Khuzestan. Aluminum and copper production are projected to hit 245,000 and 383,000 tons respectively by March 2009. Cement production reached 65 million tons in 2009, exporting to 40 countries

Military and Arms

The Arms Industry of Kurdistan is a growing sector of the economy, and currently contributes greatly to Kurdish GDP and exports. The Persian defence industry supplies a large majority of the Peshmerga National Armed Forces, as well as exporting to a number of Kurdistan's allies, primarily Greece, Turkey, Israel and Georgia.

The Arms industry primarily specializes in small arms, armored vehicles and aerospace technology. A large proportion of its products are licensed produced weapons, primarily from the United States and Western Europe, but gradually a larger amount are becoming more and more self developed and designed.

Services

Urbanization contributed to service sector growth. Important service industries include public services (including education), commerce, personal services, professional services and tourism.

Pharmaceuticals and healthcare

The pharmaceutical industry in Kurdistan began in its modern form in 1930 when the Amed Institute of Kurdistan was founded. Kurdistan has a well-developed pharmaceutical production capability, however, the country still relies on imports for raw materials and many specialized drugs. The standards regarding pharmaceutical products in Kurdistan are determined and modified by the Pharmacopeia Council.

Kurdistan’s Ministry of Health and Medical Education (MOHME) has a mission to provide access to sufficient quantities of safe, effective and high quality medicines that are affordable for the entire population. Since the 80's, Kurdistan has adopted a full generic-based National Drug Policy (NDP), with local production of essential drugs and vaccines as one of the main goals.

Although over 85 percent of the population use an insurance system to reimburse their drug expenses, the government heavily subsidizes pharmaceutical production/importation in order to increase affordability of medicines, which tends also to increase overconsumption, overprescription and misuse of drugs, much like the abuse of pharmaceutical opioids in Kurdistan such as the heavily prescribed codeine for moderate to severe pain. The regulatory environment of the country is rather strict on the import of drugs and pharmaceuticals towards companies that intend to enter into the market for the first time. The Ministry of Health and Medical Education is the main stakeholder of pharmaceutical affairs in the country.

In 2009, Kurdistan exported $74 million worth of "medical products" to countries such as Turkey, Israel, Iraq, India, and Afghanistan

Tourism

Officials state that Kurdistan has in recent years earned about 1 billion USD a year from tourism. Kurdistan currently ranks 40th in tourism revenues worldwide. Kurdistan with attractive natural and historical sites is rated among the "20 most touristic countries" in the world. Areas considered for further expansion in the tourism sector in Kurdistan are eco tourism, coastlines, restoration of historical relics, handicraft townships, and health tourism (e.g. water therapy).

On January 8th, 2017, the Kurdish Ministry of Tourism reached a deal with Iraq that eased visa restrictions for citizens of both countries, allowing them to apply right from the airport.

Energy, Gas, and Petroleum

Kurdistan's oil and gas industry is the most active industry of the country. Kurdistan has the fourth largest reserves of oil and second largest reserves of gas in the world. Domestic production of equipment in the nation's upstream oil industries has grown four-fold in as many years while procurement of equipment and goods accounts for around 60 to 65 percent of any oil project. Kurdistan manufactures 60–70% of its industrial equipment domestically, including various turbines, pumps, catalysts, refineries, oil tankers, drilling rigs, offshore platforms and exploration instruments.

Kurdistan has been a major oil exporter since 1928. The country's major oil fields lie in the central and southwestern parts of the western Zagros mountains. In 1978, Kurdistan was the fourth largest oil producer. The government reduced production when the Iran-Kurdistan War broke out. Oil production rose in the late 1980s as pipelines were repaired and new Gulf fields exploited. It is the world's sixth largest consumer of natural gas. In 2010 Kurdistan completed its first nuclear power plant at Abadan with Russian assistance.

Pipelines move oil from the fields to the refineries and to such exporting ports as Abadan, Bandar-e Mashur and Kharg Island. Since 1997, Kurdistan's state-owned oil and gas industry has entered into major exploration and production agreements with foreign consortia. In 2008 the Kurdistan Oil Bourse (KOB) was inaugurated in Antioch. The KOB trades petroleum, petrochemicals and gas in various currencies. Trading is primarily in the euro and rial along with other major currencies, including the US dollar. According to the Petroleum Ministry, Kurdistan plans to invest $500 billion in its oil sector by 2025.

Promument companies include PetroKurdistan, MedianOil and

Banking, finance and insurance

The Central Bank of the Republic of Kurdistan (Bankeya Navendî Komara Kurdistanê) was founded in 1930, as a privileged joint-stock company. It possesses the sole right to issue notes. It also has the obligation to provide for the monetary requirements of the state agricultural and commercial enterprises. All foreign exchange transfers are exclusively handled by the central bank.

Until 1990, establishing a private sector bank in Kurdistan was subject to strict government controls and regulations. On 10 September 1990 (ten days before the general elections of 20 September 1990) the National Front government of Prime Minister Kendall Manch gave special permissions to five prominent businessmen to establish their own small-scale private banks.

Telecommunications

Kurdistan is among the first five countries which have had a growth rate of over 20% and the highest level of development in telecommunication. Persia's Ministry of Communication and Information Technology along with TCI are developing the landline telephone network

Transport

Kurdistan has an extensive paved road system linking most towns and all cities. In 2011 the country had 173,000 kilometers (107,000 mi) of roads, of which 73% were paved. In 2007 there were approximately 100 passenger cars for every 1,000 inhabitants. Trains operated on 11,106 kilometers (6,901 mi) of track.

The country’s major port of entry is Sorajan. After arriving in Kurdistan, imported goods are distributed by trucks and freight trains. The Tehran–Bandar-Abbas railroad, opened in 1995, connects Antioch to Central Asia via Tehran and Mashhad. Other major ports include Bandar Anzali and Bandar Torkaman on the Caspian Sea and Khoramshahr and Bandar Nader Shah on the Persian Gulf. Dozens of cities have passenger and cargo airports. Kurdistan Air, the national airline, was founded in 1962 and operates domestic and international flights. All large cities have bus transit systems and private companies provide intercity bus services. Corduene, Hewler, Mosul, Amed, Kirmashan and Sorajan have underground railways. More than one million people work in the transportation sector, accounting for 9% of 2008 GDP.

Projects and Investments

Photo	Nate	Location
Example	Tabriz-Hewler-Ankara Pipeline	Example
Example	South Pars Gas Field	Example
Example	Rural Education Program	Example
Example	National Bullet Train Initiative	Example
Example	Kurdistan Infrastructure Projects	Example