Sustainable Recovery from COVID-19 in Iraq:

Key Findings

TThe COVID-19 pandemic has had a wide-ranging impact on the economic, social, environmental, and political climate of Iraq. Combined with other factors such as the declining price of oil, the pandemic has contributed to a 69% drop in government net income, a 16% drop in household income, a rise in gender-based violence, increased food insecurity, a variety of educational and health setbacks, escalating security concerns, and more. 

The Socio-economic Impact Assessment (SEIA) series examines how COVID-19 has affected the various fragility dimensions in Iraq. Since July 2020, some of the indicators to analyse fragility have shifted toward the high-risk/low-development end of the spectrum, indicating how the situation is worsening.

UNDP’s SEIA reports assess the current challenges facing vulnerable populations and the national and regional governments in Iraq. They provide policy recommendations for all development partners contributing to the recovery of the Iraqi people from these compound shocks.

Economic Fragility

In 2020, the COVID-19 pandemic and oil crisis impacted key macroeconomic indicators, such that:

  • Net income dropped 69% compared to the previous year 
  • The sovereign credit rating indicated substantial risk
  • The GDP contracted by 10.4%, with the non-oil economy experiencing a contraction of 9%

In December 2020, the Central Bank of Iraq (CBI) announced that it was devaluating the Iraqi dinar by over 20%, with the goal of saving approximately $8.3 billion. This has already had a significant impact, driving up import prices for essential commodities and raw materials and boosting inflation across the country. 

In the first quarter of 2021, the Government of Iraq announced that it would begin the implementation phase of its White Paper on economic reforms. Parliament approved a budget of $89.65 billion for 2021, with a projected deficit of $20 billion. Iraq faces an immediate challenge to finance its deficit and is looking to providers of external assistance, as well as domestic and international market actors.

Income, Employment and Livelihoods

Overall, unemployment increased from 12.76% in 2019 to 13.74% in 2020, with indications that it could increase to up to 16% in the next two years. In both the Kurdistan Region and Federal Iraq, households experienced a decrease in average monthly employment income throughout the pandemic.

Private Sector and SMEs

The number of small and mid-sized enterprises reporting risk of permanent closure of their businesses halved between June and December 2020. Employment began to recover between June and November 2020, but did not reach pre-pandemic levels.

Fostering private sector development at the scale and pace required to generate revenue to fund public services independent of the oil sector is a long-term ambition. Without an appropriate environment for enterprise creation and expansion of the private sector, the Iraqi economy will remain highly vulnerable to economic shocks.

Societal Fragility

The pandemic has made it more difficult to access essential social services, especially for women and vulnerable households. It has also weakened access to quality health and educational services, exacerbating existing inequalities in Iraq. A recent survey reported that approximately 700,000 households have faced challenges accessing health facilities.

Social Protection

Social protection programmes are a significant budget item in Iraq, and represented 15% of the 2019 government budget (approximately $17 billion). However, due to macroeconomic challenges and declining oil revenue, social protection programmes now represent just 5% of the 2021 budget (approximately $4.5 billion). This severe decrease from the previous budget comes at a time when needs have significantly increased.

In order to support citizens during this particularly challenging time, the government will need to:

  • Enhance access to affordable health care
  • Close gaps in social protection and extend financial protection
  • Support enterprises in retaining workers
  • Provide income security to unemployed workers, especially in the informal sector

The first steps toward achieving these goals were made when the government began developing an actionable roadmap for 2021-2025 with the goal of reforming social protection.

Food Security

With demand outpacing food supply, Iraqis are faced with rising food prices and increased hunger. In fact, many measures implemented to control the spread of COVID-19 have exacerbated food insecurity. Around 6% of the population (2.4 million) has insufficient access to food. 

Prices of key staples such as sugar, oil and vegetables continue to be volatile. To cope with rising food costs, households have reduced food intake to cut expenses, particularly in rural areas.

Gender-based Violence

65% of gender-based violence service points have reported an increase in one or more types of violence in their areas of intervention. They have also reported an overall 50% reduction in response services. The most vulnerable and at-risk groups are female-headed households, adolescent girls, underage mothers and families perceived to be affiliated with extremist groups.

Essential Social Services

Essential social services have been widely affected by measures to contain COVID-19. For instance, suspension of classes and meal programmes in schools has impacted student retention, learning and nutrition. On a more positive note, most essential social services have continued to function in IDP and refugee camps and areas with a high density of displaced populations, albeit at limited capacity.

The following social services have been impacted by COVID-19 and the efforts to curtail its spread:

  • Health: 44% of households in both urban and rural areas have reported that the pandemic has made it harder to access medical assistance. Immunization services have been interrupted or are suboptimal, increasing the risk of vaccine-preventable disease outbreaks. In the first half of 2020 alone, over 160,000 children did not receive their measles vaccination.
  • Education: 23% of households with school-aged children have reported that at least one child of school age was not attending school regularly from December 2020 to March 2021. At the regional level, stark differences are noticeable, with 48% reported for the KR-I compared to 14% in Federal Iraq. Utilizing online tools has also been a significant hurdle considering that 50% of Iraqis do not have access to the Internet.
  • Water, sanitation and hygiene, and waste management: Minimal impacts have been observed, with 84% of surveyed households reporting no negative WASH changes associated with the pandemic.

Environmental Fragility

The health and economic consequences of the COVID-19 pandemic in Iraq have had direct negative environmental impacts such as increased quantities of medical waste, but also some positive impacts, such as temporary improvements in air quality and ecosystems.

The pandemic has also had a series of indirect environmental impacts, including:

  • Reduced environmental monitoring
  • Environmental deregulation
  • The potential of reduced funding
  • Limited political attention for future initiatives

Building long-term resilience and supporting sustainable growth requires addressing the effects of climate change in Iraq, as well as reducing the impact of water scarcity, chronic lack of access to energy, environmental pollution and ineffective waste management systems.

Political Fragility

The lingering state-society trust gap remains one of the greatest challenges to Iraq's COVID-19 response and recovery efforts. The previous government has been criticized for responding too slowly to the pandemic, and some citizens believe that different communities have been treated unequally in the response. There are also reports that lockdown measures have been used to justify restrictions on freedom of speech, freedom of movement and freedom of opinion, especially related to popular demonstrations. 

With elections slated to take place in October 2021, there is added pressure on the current government to deliver on its promises and commitments for recovery.

Social Cohesion

Tensions among different parts of the country may become more explicit if resources to address the consequences of COVID-19 are perceived as benefiting specific areas and population groups, particularly those liberated from ISIL.

Fortunately, a surge in local civil society provision of aid to vulnerable families and advocacy for social solidarity, as well as other community-driven initiatives to combat COVID-19, have created an important space to foster and facilitate dialogue about existing and emerging issues.

Corruption

Growing discontent has erupted in large demonstrations and protests, resulting in violent confrontations between security forces and armed groups.

Upon his appointment, Prime Minister Al Khadimi announced an ambitious programme for reforms that includes addressing the COVID-19 pandemic and the demands of demonstrators. The government has also promised to tackle corruption and increase trust in institutions. However, despite efforts to establish an institutional and legislative base to address these issues, corruption remains acute.

Federal and KR-I Relations

There is limited evidence of coordination in the responses to COVID-19 between the Kurdish Regional Government and the Federal Government of Iraq. Given the pressing need to address the pandemic, maintain the economy, preserve the public sector and deal with increased security issues, there is a danger that the relationship between the two governments will no longer be a priority, and social divisions will become further entrenched.

Security Fragility

Despite Iraq’s declared victory over ISIL in December 2017, insecurity has remained constant throughout much of the previously occupied territories.

ISIL

In the wake of COVID-19 and the drawdown of U.S. forces, security gaps have worsened, allowing ISIL to move more freely, conduct prison breaks, carry out more sophisticated attacks and smuggle fighters across borders.

There were 228 ISIL attacks between July and September 2020. However, Operation Inherent Resolve estimated that at the end of 2020 there were between 8,000 and 16,000 ISIL fighters in Iraq and Syria, down from 14,000 to 18,000 in January 2020.

Unfortunately, COVID-19 has provided room for different armed groups to gain a stronger social presence and provide support to vulnerable areas, causing some communities to look favourably on these groups.

Security Forces and the Rule of Law

The relationship between security actors and the public has become increasingly fraught over the past year, due in part to perceived heavy-handed policing responses to public protests in 2019 and 2020, and the perception that armed volunteer groups are taking roles in politics and the provision of services and public goods. 

Lockdown measures to tackle COVID-19 have also reduced access to justice, adversely affecting social cohesion. Formal courts have been closed and legal proceedings paused or significantly delayed “with the exception of urgent cases.” This has had a particular impact on women who have not been able to access family courts.

Vulnerable Groups

Women and Female-headed Households

Women have been disproportionately impacted by the secondary effects of COVID-19, with sharply rising rates of reported cases of gender-based violence. Female-headed households have also experienced a greater decline in income from employment than male-headed households. Areas where women seem to have been particularly affected relate to freedom of movement and access to healthcare such as sexual and reproductive health. Overall, given the very limited presence of women in positions of power, women have been largely absent from decision-making and leadership roles in response to the pandemic.

Children and Youth

School/university closures and limited access to online education have significantly impacted children and youth. Such widespread education disruptions are likely to translate into future knowledge gaps and economic productivity losses. Young people have also been impacted by a loss of income, as the informal sector, which largely employs youth workers, has been hit hard by the economic downturn.

Displaced Communities

Today in Iraq, of the 6 million people displaced during the conflict with ISIL, 4.7 million have returned to their areas of origin, while 1.3 million still remain displaced.

Displaced households (IDPs and refugees) were likely to have greater declines to their mean household income (declines of 28% and 32%, respectively) than non-displaced households (declines of 27% for returnees and 14% for host community households) as a result of the pandemic. This is likely due to the fact that IDPs predominantly work in the informal sector. Further, some services provided by the government and international organizations are inaccessible for displaced communities, as the ability to obtain and retain proper identification is necessary to benefit from both national social protection programs and other types of aid.

Poverty Impact

Through modelling, UNDP has found that a significant push to invest in the Sustainable Development Goals (SDGs) will have a concrete and measurable impact on the poorest communities and individuals. This means that in the short term, significant efforts have to be made to address drivers of fragility across the various dimensions. These efforts help ensure that no one is left behind, particularly vulnerable communities that have been disproportionately affected by the pandemic.

The graph shows the potential effects of three COVID-19 scenarios:

  • The “COVID Baseline” scenario represents significant increases in poverty and hunger and substantial longer-term negative consequences.
  • The “High Damage” scenario describes a future where the economic damage is worse and COVID-19 recovery is delayed.
  • The “SDG Push” scenario outlines the impact of targeted policy interventions that can accelerate progress toward a more equitable and resilient future.

UNDP Strategic Engagement on Fragility in Iraq

UNDP Iraq has originated a number of steps to address and/or integrate fragility into various initiatives. These can be categorised in three main clusters:

Integration of a fragility approach in strategies, plans, and programming

Fragility-based multi-dimensional UNDP programming

Launch of a number of joint analyses with other UN agencies

Download the Socio-economic Impact Assessment series

Sustainable Recovery from COVID-19 in Iraq: Key Findings
English | Arabic

The Impact of the Oil Crisis and COVID-19 on Iraq’s Fragility English | Arabic

Key Findings of the Socioeconomic Impact Assessment of COVID-19 on Iraq’s Vulnerable Populations
English | Arabic


UNDP also provides more in-depth insights regarding the impact of COVID-19 on:

The Iraqi Economy  English | Arabic
The Environment English | Arabic
Social Protection English | Arabic
Social Cohesion English | Arabic
Vulnerable Groups English | Arabic


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For a full list of sources and references used on this page, please consult the ‘Sustainable Recovery from COVID-19 in Iraq: Key Findings’ report.