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The World Bank: Corona increases poverty in Iraq by 8 percent

The World Bank Group expected the Middle East and North Africa to further decline the economy of the countries of the region due to the Corona epidemic, to a greater degree than its previous expectations, so that the contraction exceeds 5 percent on average, which can be increased with the monitoring of new figures, while Iraq and Lebanon were included in the forefront of the Middle East countries Where poverty rates will rise.

In the latest issue of the World Bank Group’s newsletter to monitor the developments of the Corona epidemic in the region, the economic downturn figures were exceeded based on the most recent private sector figures and data in the region.

In mid-May, the contraction in GDP growth was estimated at 5.1 percent on average for the whole region, the contraction in the economy of the oil-exporting countries by 6.1 percent, and for the Gulf Cooperation Council countries alone by 4.7 percent. As for energy-importing developing countries, the World Bank working group expected their economy to shrink by a contraction in growth at 4.3 percent.

This is the third time that economic growth forecasts for countries in the MENA region have been lowered this year. With the release of new figures and data, for the last month and the next, the World Bank’s expectations could witness new cuts until the effects of reopening the region’s economies, and easing the restrictions of the embargo to reduce the spread of the Corona virus, begin to be reflected in the macroeconomic figures.

The World Bank working group estimates are based on an analogy to the economic growth rate of countries in the region in December 2019. On this basis, expectations in March were for the GDP to contract by 0.5 percent. Then, with the increase in the spread of the Corona epidemic and the tightening of preventive measures by most countries in the region and consequently the disruption of several economic sectors, expectations were reduced to a contraction of 1.8 percent in April.

According to the World Bank Group indicators and poverty elasticity standards, the numbers mentioned in the latest issue of the Middle East and North Africa Working Group’s bulletin indicate expectations of an increase in the population under the poverty line, i.e. who live on $ 1.9 per day, or less, in the countries of the region. The result of the macroeconomic forecasts appears more clearly on countries with more people working in special occupations or on the margins of the economy.

There are eight countries where poverty rates among the population appear more this year due to the negative effects of the Corona epidemic on the economy; It is Lebanon, Iraq, Algeria, Iran, Jordan, Morocco, Tunisia and Egypt.

Lebanon comes in the forefront of the countries that witness an expected increase in poverty rates by 9.4 percent, followed by Iraq, an additional 8 percent over the current rates, while Egypt comes at the bottom of the list of the eight countries, an additional 3.2 percent in the numbers of people who fall below the poverty line, preceded by Tunisia by an increase of 4.7 percent.

And the bulletin in its latest issue attributes the expected increase in the numbers of those who fall below the poverty line to the high cost of living and the loss of income resulting from the disruption of the economy. But the most important factor mentioned by the region’s working group at the World Bank is the apparent increase in food commodity prices, which compounds the impact of the loss of income sources for families at risk of poverty.

The bulletin details other forms of impact on the population due to the Coruna epidemic and its negative economic consequences, foremost of which are sectors of the population that face a lack of health care as a result of the challenge facing the health sector in dealing with the epidemic. Also, the decline in the traditional social welfare allocations for marginalized groups as a result of directing resources to fight the epidemic, support vital sectors of the economy, and help the most affected sectors to survive.

Although the World Bank Group expects economic growth next year to return to rates close to the growth rate at the end of last year (December 2019 numbers), the most recent figures on which the current forecast is based are until May 12.

Since most of the countries in the region started easing the measures at the end of May or the beginning of June, the negative impact of the closure remains clear, at least in the figures   for the second half of May to mid-June. As a result, this may be the last expectation for a reduction in growth rates for the region by the World Bank working group. Source