These results are not homogeneous across regions. Consumption per capita in IS‐affected areas would have been reduced by 20% which is double the average national level impact. This region was followed by Kurdistan with a 14% decline, South (‐11%), Centre (‐9%), Rest of North (‐9%) and Baghdad (‐8%) (Table 7).

## **Poverty and inequality**

Table 8 shows projected poverty measures for 2014 in both scenarios –i.e. business as usual and crisis‐ for the whole country and the regions. Poverty headcount rates are expected to increase by 7.5 percentage points between the business as usual and crisis scenarios. This represents roughly an additional 3 million individuals who are estimated to fall into poverty as a consequence of the twin crises. The magnitude of the impact is likely to have pushed Iraq back to poverty levels similar to those of 2007.

These twin crises have not only affected the welfare levels of the population in general, but also of those who would have been poor in the business as usual scenario. This is measured by an increase of almost 3 percentage points in the poverty gap as well as the 1.3 percentage point growth in severity for the country as a whole (Table 8).

Even though the negative impacts of these crises have affected all regions, the intensity was not the same across the country. While Kurdistan and IS‐affected regions are estimated to have quadrupled and doubled their poverty incidence levels respectively, the Centre would have increased its poverty incidence by almost 6 percentage points followed by Rest of the North, South and Baghdad. The welfare levels of the poor have also deteriorated across all regions and similar patterns are observed for the gap and severity indices with the most severe effects in the IS‐affected and Kurdistan regions. Interestingly, the poverty gap and severity would have increased more in the South than in Centre, Rest of North and Baghdad, likely reflecting the larger share of population living close to the poverty line there prior to 2014 (World Bank 2015). The adverse welfare impacts in Kurdistan and the IS‐affected governorates are likely underestimates because they do not take into the likely increase in the prices of basic needs in the IS‐ affected governorates or the lack of payment of public sector salaries in Kurdistan during some months of 2014.

Aggregate inequality is expected to remain stable relative to the business as usual scenario for the whole population – with the Gini and Theil index increasing slightly almost 1 point between scenarios (Table 9). However, the average nation‐wide impact hides differences across space. Three regions ‐i.e. Kurdistan, Baghdad and IS‐affected‐ would have suffered an increase in their inequality levels as a consequence of the crises. Most of these movements are projected to be partially compensated by other regions producing a relatively stable inequality for the country.

# **Distributional effects**

One of the advantages of using the micro‐simulation approach is the possibility of fully taking into account the heterogeneity of individuals observed in the household survey. This allows us to identify with some precision who are likely to be the winners or losers of the shocks modeled. Indeed, as the results 17