WASHINGTON, Feb. 13 (UPI) -- Despite its vast oil wealth, the World Bank said it expects the economy of the semiautonomous Kurdish region of Iraq to shrink because of regional crises.
Oil work is continuing in the northern Kurdish region of Iraq as military pressure pushes back the insurgency waged by the group calling itself the Islamic State. A late 2014 budget agreement with the federal government added further momentum to the region's oil sector.
The World Bank, in an 87-page report, said the stable security environment before 2014 allowed the Kurdish economy to thrive. The economy since 2005 expanded every year and real economic growth of around 8 percent was reported in 2013, driven largely by oil production.
Strains from the influx of Syrians fleeing civil war, however, are emerging in the Kurdish north.
"Economic growth contracted 5 percentage points in the Kurdistan region of Iraq, and the poverty rate more than doubled, increasing from 3.5 percent to 8.1 percent," the bank's report said.
A report from the U.S. Energy Information Administration found total crude oil production in Iraq rose nearly 10 percent from 2013 to average almost 3.4 million barrels per day, which represents about 60 percent of the production growth from members of the Organization of Petroleum Exporting Countries last year.
The World Bank said the oil sector is the main source of economic growth for the Kurdish government. Oil production there is expected to at least double from its 2013 level of 250,000 barrels per day by 2020.
Despite its oil wealth, the World Bank said the Kurdish region needs at least $1.4 billion to stabilize the economy in 2015.
"The international community remains deeply concerned by the circumstances facing the refugees and internally displaced persons in the Kurdistan region of Iraq," World Bank envoy for Iraq Robert Bou Jaoude said in a statement. "We hope that this assessment will support the KRG's dialogue with its national and international counterparts and that a swift resolution to this problem will be identified."