Page 11 - IRANRptSep19

3.0 Macro Economy
3.1 Macroeconomic overview
IMF anticipates Iran will experience growth contraction of at least 6% and up to 50% inflation in 2019
Iran’s economy is expected to shrink for a second consecutive year in 2019 while the country’s consumer price index (CPI) inflation could hit 50%, the International Monetary Fund said on April 29.
The US will from May step up its attempt to throttle the Iranian economy to force concessions on Tehran’s approach to Middle East affairs by trying to force Iran’s crude oil exports to zero. Last year’s reintroduction of sanctions against Iran pushed the Iranians back into recession, with growth contracting by 3.9% in 2018, IMF estimates suggest. The Fund now sees Iran on course for at least a 6% decline in GDP in 2019, according to Jihad Azour, director of the IMF’s Middle East and Central Asia department, who spoke to Bloomberg. CPI prices, he said, could average 50% higher this year, given the tougher situation the economy is exposed to. Before the announcement on driving to eliminate oil exports, the IMF was predicting inflation of 37%.
“Clearly the re-imposition of sanctions and the removal of the waivers [that allowed some countries to temporarily continue importing Iranian oil without fear of US sanctions] will have an additional negative impact on the Iranian economy both in terms of growth and in terms of inflation, where inflation could reach 50% or even more this year,” he said.
Iran should work to eliminate the gap that currently exists between the Iranian rial (IRR) market exchange rates and official exchange rates, Azour added. The IRR is around two-thirds weaker against the dollar on the unofficial market compared to where it stood before it became clear early last year that the US was switching its Iran policy back to a sanctions-led approach.
3.2 Macro outlook
World Bank: US sanctions to drive Iranian GDP to 4.5% contraction in 2019
The impact of US sanctions on Iran’s economy is projected to peak this year, with growth resuming in 2020, according to the June issue of the World Bank’s twice-yearly Global Economic Prospects report, r eleased on May 4.
11 IRAN Country Report September 2019 www.intellinews.com