Iraq’s economic prospects have “markedly worsened” amid the novel coronavirus pandemic, according to a new report released by the World Bank.
The report published on Sunday claims that lockdown measures introduced to curb the spread of the virus will cause the economy to contract 9.7 percent this year - threatening to plunge millions into poverty.
The organization has urged the Iraqi government to introduce reforms to diversify the economy, which relies almost entirely on oil revenue to stay afloat.
Iraq’s oil sector has been ravaged by unprecedented drops in oil prices and a halt in production as the world comes to grips with COVID-19.
The country’s oil revenues fell by almost half in April in a second consecutive month of losses, according to oil ministry figures published last week.
Iraq’s crude oil export prices crashed to US$28.4 per barrel in March 2020, with companies announcing cutbacks in Iraq and the Kurdistan Region due to financial uncertainty.
“At this price, Iraq will face extreme difficulties in financing basic expenditures planned for 2020,” reads the World Bank report.
In order to grow, Baghdad must “consistently grow its non-oil economy at a much faster pace,” it added.
However, alternative sources of revenue are not faring much better.
Home to the holy Shiite cities of Karbala and Najaf, Iraq’s religious tourism - said to be the second-largest form of revenue after oil- has been decimated by the pandemic.
The COVID-19 lockdown and travel ban has closed 95 percent of hotels in Najaf, according to an AFP report.
Iraq has recorded 2,346 cases of the virus so far.
Protests which rocked Baghdad and cities across central and southern Iraq from October 2019 have also contributed to financial instability.
Economic strife was one in a string of grievances driving Iraqis onto the streets late last year. Initial calls for reform centered around unemployment and dissatisfaction with the Iraqi political elite who have dominated Baghdad since 2003, and soon evolved into calls for complete governmental change.
“Amidst this situation, implementing reforms in Iraq has become even more crucial,” the report added.