Page 11 - IRANRptMay19

3.2 Macro outlook
World Bank and IMF gauge course of Iran’s recession and sanctions-hit economy
The World Bank (WB) and the International Monetary Fund (IMF) released their mid-year reports noting negative turns in forecast Iranian GDP growth.
The IMF said recession-hit Iran’s GDP was set to contract by as much as 6% in 2019 due to the heavy US sanctions that have squeezed the country’s economy since last year. The IMF also said that US sanctions on Iranian oil exports combined with record-high US crude oil production negatively affected the oil market and added “downward pressure on prices”.
The WB noted in its report summary: “In the medium term, the economy is expected to undergo a period of stagflation until April 2020 as oil output continues to decline along with other mounting external economic challenges.”
The report added: “The economy is projected to contract by more than 2 percent in 2018/19 and 2019/20 before returning to a modest recovery path albeit from a smaller base. Inflation is expected to be around 30 percent in 2018/19 and increase further in the following year as the full effect of the exchange rate depreciation is passed on.”
The report goes on to note that assuming restrictions remain on Iranian oil exports, there remains room for further downside risk from traditional buyers of Iranian crude namely India and China.
“Further restrictions on foreign trade and clearing of trade and debts could also contribute to higher financing costs and inflationary pressures,” it added.
The IMF’s report is more downbeat looking at the next two years, but sees modest growth in 2020 of 0.2%.
The IMF observed that Iran’s current account balance is expected to turn negative in 2019 and 2020 with declines of 0.4% and 0.6% year on year, respectively.
The Fund’s report also noted that general unemployment in Iran was expected to increase from 13.9% in 2018 to 15.4% and 16.1% in 2019 and 2020, respectively.
11 IRAN Country Report May 2019 www.intellinews.com