Sadr City (Thawra 1 and 2), also in Baghdad city, became a hub for followers of Shi’ite leader Moqtada Al-Sadr’s Al Mehdi Army following the Multi National Forces (MNF-I) invasion. There was intense fighting between the Al Mehdi Army and joint Iraqi Security Force and MNF-I forces in Sadr City between March and May 2008. Numbers of security incidents in Baghdad decreased significantly during the second half of 2008, with an average of five security incidents occurring per day from October to December 2009, compared to 48 per day between August and October 2007.

The improved security situation may provide a more conducive environment for foreign and domestic investment, but major improvements to dilapidated communications, electricity, tourism, industrial and transport infrastructure are required to facilitate economic growth and sustainable job creation. The unemployment rate (12%) in the governorate is below the national average of 15%, but there are large numbers of unemployed youth in urban areas.

Baghdad governorate is the closest to meeting the nationalized set of Millennium Development Goals by 2015. However, large numbers of people still experience considerable humanitarian and developmental needs. Sadr City contains large numbers of poor people, and is one of the most overcrowded districts in Iraq.

The 600,000 IDPs in Baghdad displaced during the violence of 2006-2007 comprise over a third of the estimated 1.6 million displaced within Iraq from 2006 onwards, with the majority living in Karkh and Resafa districts. 83% of those assessed by IOM have been displaced from within the governorate itself. Food and access to employment opportunities are cited by IDPs in Baghdad as their major priority needs, but IDP vulnerabilities in terms of health and access to essential services vary little from those of the general population.