The economic output of the construction industry in Iraq is projected to grow by 5.2% in real terms in 2025, driven by significant public and private sector investments in transportation, renewable energy, and tourism, according to a recent report by GlobalData.

The Iraqi government aims to attract ID9.1tn ($7bn) to stimulate economic growth, which is expected to bolster investments in various construction projects.

In August 2023, Iraq established the Iraq Development Fund to streamline investment processes for local and foreign businesses, focusing on key sectors such as tourism, healthcare, and public transportation. A delegation of 30 French companies visited Iraq in February 2025 to explore opportunities for investing up to ID5.2tn ($4bn) in these priority areas.

The release of Iraq’s 2025 federal budget has been delayed due to financial deficits and political challenges, creating uncertainty for the construction industry. A parliamentary lawsuit has been filed against the government for its failure to submit the budget tables, which are now expected to be presented in early July 2025.

The government is operating under a three-year budget law covering 2023–25, but persistent budget shortfalls are anticipated to result in a deficit of about ID63.7tn ($49bn). To mitigate this, the government plans to borrow from domestic banks.

In addition to addressing immediate financial concerns, Iraq is making strides in infrastructure development. The ongoing construction of the Al-Faw Grand Port and Al-Nasiriyah International Airport is expected to drive demand for construction services and materials, reinforcing sector growth.

Airport award

MEED reported in 2021 that the Civil Aviation Authority has awarded China State Construction Engineering Corporation (CSCEC) a $367m contract for the construction work at Nasiriyah International airport in Iraq.

It involves building a new terminal building, air traffic control building, cargo building, 25 kilometres of airport connection lines and auxiliary facilities, and the upgrade and reconstruction of the runway and apron areas.

In 2024, Iraqi Prime Minister Mohammed Shia Al-Sudani said the first phase of Iraq’s Grand Faw Port project is due to be completed before the end of 2025. In 2021, the a contract worth $2.6bn with South Korea’s Daewoo E&C was signed to undertake the main container terminal package.

The Iraqi government has also announced plans to commence construction on the Baghdad Metro project by the end of 2025, with an estimated total cost of ID23.4tn ($18bn). The World Bank has also approved $930m of financing for the Iraq Railways Extension and Modernisation project, aimed at improving railway performance across the country.

In early July, MEED reported that Iraq’s Ministry of Transport and its General Company for Railways division will soon start procurement for a $1bn-plus modernisation programme of its north-south main rail line.

Known as the Iraq Railways Extension & Modernisation (IREM) project, the scheme comprises the rehabilitation, upgrade and modernisation of 1,047 kilometres (km) of existing single-line track linking Umm Qasr Port in the south with Mosul in the north, running through Basra and Baghdad. There will be two main construction packages.

Iraq’s rail sector consists of a 2,272km standard gauge network with 115 stations, most of which are in poor condition and provide only limited transport options.