Expect operational disruptions to increase in 2022 following Iraq’s election and ensure your local partners are protected against intensified security risks. Despite weak private confidence, fiscal reform delays should support B2C demand in 2022. High investment risks will weigh on B2B demand into H1 2022 at least; however, growth opportunities will likely be driven by retail and ICT customers. Despite the potential delay in the 2022 budget, expect B2G demand to grow in 2022, driven by high oil prices (above US$ 70/bbl.). Monitor budget debates in the coming months to identify which areas will receive more funding and position yourself ahead of the competition.


Iraq held its parliamentary elections on October 10, five months earlier than originally planned, in response to demands from the protests that have been recurring since late 2019. Voter turnout of 41% was the lowest of any of the six elections since 2003, down from 44.5% in the previous election in 2018. Muqtada al-Sadr’s Sairoon Alliance (Shiite) remained the largest bloc in parliament with 73 seats, 19 more than the previous legislature, followed by Mohamed al-Halbusi’s Taqaddum Alliance (Sunni), which won 37 seats. Meanwhile, the main loser in the election was the Fatah Alliance and the Iranian-aligned militia within the Popular Mobilization Forces (PMF) that it represents, which won only 15 seats compared with 48 in 2018.

Our View

Our base case assumes political instability will persist well into 2022. Expect negotiations to form a government and agree on party representation to last into Q1 2022, given that no single party was able to secure a majority. This process could delay the 2022 budget approval beyond January. Given the increased dominance of the Sairoon alliance in the parliament, we expect the political and economic status quo to be preserved, with continued refusal to implement significant governance or economic reforms, threatening the success of any potential IMF deal. We expect protests to reappear within Q4 2021 and in 2022 as the low voter turnout highlights weak public confidence in the political process. The risk of political violence and its potentially adverse impact on economic recovery in 2022 is rising following the significant political losses sustained by the Fatah Alliance.

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