Iraq Economic News and Points To Ponder Tuesday Afternoon 9-16-25

The Shadow Economy in Numbers: Tons of Gold Worth Billions of Dollars to Make Up for the "Black Dollar" Shortage

Baghdad Today – Baghdad  In a volatile economic landscape dominated by weak oversight and a fluctuating local currency, gold in Iraq has transformed from a traditional commodity into a central financial instrument, simultaneously reflecting internal crises and external conflicts.

 Figures announced for the first half of 2025 revealed imports exceeding $30 billion from five major countries, led by the UAE with $10.5 billion, followed by China with $8.8 billion, Turkey with $4.9 billion, the European Union with $3 billion, and India with $1.8 billion. Among these imports, precious metals—led by gold—were valued at $3.3 billion, confirming that this sector now occupies an exceptional position in the structure of Iraqi trade.

Given the restrictions imposed by the US Treasury Department since 2023 on bank transfers, gold has emerged as an alternative channel to compensate for the dollar shortage.

Instead of outflowing hard currency through official remittances, importing gold in large quantities has become a means of recirculating funds, whether by re-exporting it to neighboring countries such as Turkey, bartering it for Iranian goods, or even using it as an asset that can be easily liquidated away from the banking system.

According to economic estimates, gold has become a "practical cover" for dollar smuggling operations, as it is imported through official outlets but redirected through unregulated financial channels. This dual role makes the precious metal not just a commodity, but an alternative instrument that rivals the dollar in influence.

Previous data reveals that 2024 marked a shocking turning point, when the value of gold imports reached $12.5 billion, equivalent to 16% of the country's total imports. This figure is roughly equivalent to the Central Bank's entire gold reserve of $18 billion.

In the absence of accurate data on the entry points through which the gold was imported or its internal distribution mechanisms, questions have grown about the final destination of these quantities: Was it actually consumed in the local market, re-exported, or used as a barter instrument in undisclosed trade relations?

This shift is no longer a purely financial matter. In the markets, rising gold prices have directly impacted daily life. A Baghdad Today correspondent observed a widespread recession in goldsmith shops, with the price of a 21-karat gold misqal exceeding 730,000 dinars, while 24-karat gold jumped to more than 830,000 dinars, coinciding with the global price of an ounce exceeding $3,600.

These figures have prompted many young people to postpone marriage and imposed new burdens on families with the inflated dowries.

Social affairs experts warn that the phenomenon is no longer merely a market crisis, but rather a threat to the fabric of society by deepening the phenomenon of aversion to marriage and delaying the age of starting a family.

Given these facts, economic expert Manar Al-Abidi stressed that "government efforts to control imports face significant challenges, particularly with the attempt to include all goods in the reform at once.

" He called for "focusing primarily on high-value goods such as gold, and linking transactions with them to transparent electronic payment mechanisms that allow tracking of sales and purchases and identifying the ultimate beneficiary."

According to institutional estimates, automating the gold sector alone is sufficient to expose financial loopholes and close the door to its exploitation as a cover for parallel operations.

From a different perspective, economic expert Nasser Al-Kanani believes that the crisis is not limited to Iraq alone. "The recent rise in gold prices in the Iraqi market is inseparable from the global wave affecting the precious metal," Al-Kanani says, explaining that "the local market is affected by a dual effect: the movement of international stock exchanges and the dollar exchange rate on the parallel market."

This approach reveals that Iraq, despite its unique crises, remains part of a global cycle that makes gold a safe haven for investors amid escalating geopolitical tensions. He also notes that the price rise is not just a local result, but a reflection of global shocks.

In a move described as a strategic shift, Al-Kanani revealed that "Iraq's purchase of more than 20 tons of gold in one year, and its rise to seventh place globally in this field, reflects a calculated move by the Central Bank to protect the national economy from fluctuations in foreign exchange rates.

" This move, according to Al-Kanani, "gives Iraq greater flexibility in managing monetary policy, enhances confidence in the local economy, and may positively impact the value of the dinar and market stability."

 However, this path remains fraught with risks, as gold could transform from a strategic asset into an open channel if smuggling operations continue or oversight is absent.

In conclusion, gold in Iraq has transcended its status as a commodity and has become a crossroads between three possibilities: an economic buffer, a pressing social burden, and a card of political influence.

However, the lack of strict oversight also makes it an open loophole that could transform into a permanent channel for dollar smuggling or bartering with neighboring countries, away from the banking system. This exposes the country to further exposure to external pressures.

The future of this resource will not be determined by the volume of tons entering the market, but rather by the state's ability to control its flow and prevent its leakage into the shadow economy.

 This would transform it from a source of concern to an element of strength, and from a parallel tool for currency smuggling to a strategic asset that reinforces confidence in the dinar and Iraqi financial policy, according to observers.

Source: Baghdad Today Monitoring and Follow-up Department https://baghdadtoday.news/283275-.html    

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