Iraq Construction Market to Grow by 5.2% in 2025, Supported by Government Investments and Renewable Energy Projects

Strategic Insights -

The Iraq construction market is expected to experience a significant growth spurt in 2025, driven by government investments and renewable energy projects. The country's government aims to attract IQD9.1 trillion ($7 billion) to stimulate economic growth, which is expected to drive investments in construction projects. The establishment of the Iraq Development Fund in August 2023 will also streamline investment processes for local and foreign businesses. This growth trend is expected to continue over the remainder of the forecast period, with an annual average growth rate of 4.8% from 2026 to 2029.

Key Takeaways:

  • The Iraqi construction industry is expected to grow by 5.2% in real terms in 2025, supported by public and private sector investments in transportation, renewable energy, and tourism.
  • The government's aim to attract IQD9.1 trillion ($7 billion) to stimulate economic growth in 2025 is expected to drive investments for the development of construction projects in the country.
  • The Iraq Development Fund has been established to streamline investment processes for local and foreign businesses, particularly in key sectors such as tourism, healthcare, the environment, public transportation, and smart farming.
  • A delegation of 30 French companies visited Iraq in February 2025 to discuss opportunities for investing up to IQD5.2 trillion ($4 billion) in new projects across these priority areas.
  • The Hadara (Civilization) project has been launched by the Iraq Development Fund to collaborate with Iraqi and foreign investors in developing tourist resorts at prominent archaeological sites, with the goal of attracting up to IQD1.3 trillion ($1 billion) in tourism investments in 2025.
  • The Iraqi construction industry is expected to register an annual average growth rate of 4.8% during 2026-2029, supported by investments in energy, water infrastructure, and the government's aim to boost its oil production capacity to over 6 million barrels per day by 2029.
  • The Ministry of Oil is working with the Ministry of Electricity to develop 12GW of renewable energy capacity by 2030 to meet rising electricity demand.
  • Standard Chartered has provided a IQD123.5 billion ($95 million) loan to help Iraq strengthen its power infrastructure in February 2025.

Statistics:

  • Expected annual growth rate of the Iraqi construction industry during 2026-2029: 4.8%
  • Government's aim to attract IQD9.1 trillion ($7 billion) to stimulate economic growth in 2025
  • Expected investment by French companies in new projects: up to IQD5.2 trillion ($4 billion)
  • Expected tourism investments in 2025: up to IQD1.3 trillion ($1 billion)
  • Renewable energy capacity to be developed by 2030: 12GW
  • Oil production capacity target by 2029: over 6 million barrels per day
  • Current oil production capacity: approximately 4.5 million barrels per day as of 2024

Sources:

  • "Iraq Construction Market Size, Trends, and Forecasts by Sector - Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential Market Analysis to 2029 (H1 2025)" report by Research and Markets
  • Iraq Development Fund (no date)
  • Standard Chartered (no date)
  • Ministry of Oil and Ministry of Electricity (no date)