Rovers midfielder Tim Payne joined the squad on the day of the game and got some useful minutes under his belt in the high-scoring defeat.
The Junior All Whites started strongly and took the lead after just three minutes through Hamish Watson, but Iraq hit back half-an-hour later.
The Asian confederation side took the lead in first half injury-time, before Kiwi skipper Luke Adams replied moments later.
After the interval, Iraq scored two goals in three minutes to take a 4-2 lead, before New Zealand reduced the arrears on 68 minutes through Louis Fenton’s penalty. However, Iraq wrapped up the win two minutes later, as the game finished 5-3.
The Junior All Whites, who lost 5-0 to Australia earlier in the week, play their final international friendly against Egypt on Monday, before moving to their Bursa base ahead of the tournament finals.