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Sanctions hammered Iran saw GDP shrink 8.7% in 2019 and can’t expect growth in 2020 says World Bank
The “economic war” waged by the US against Iran has exacted an even worse toll on the Islamic Republic’s economy than was anticipated if the latest World Bank assessment is correct.
In the January 2020 edition of its Global Economic Prospects report released on January 9, the World Bank estimates that Iranian GDP contracted by as much as 8.7% in 2019, a year that saw the Trump administration gradually introduce tougher and tougher sanctions against Tehran including a drive to squeeze all Iranian oil off world export markets.
Iranian GDP in 2018 shrank by 4.9% following growth of 3.8% in 2017.
The effects of the US throttling of Iran’s economy pushed Iranian inflation to more than 50% in mid-2019, partly reflecting the earlier severe depreciation of the Iranian rial (IRR) in the unofficial parallel market, but it subsided in late 2019 to below 30%.
3.1 Macroeconomic outlook
Pandemic-afflicted year puts Iran on course for 2020 GDP contraction of 6% says IMF
Iran will this year suffer a GDP contraction of 6% if the latest World Economic Outlook forecasting of the International Monetary Fund (IMF), released on April 14, proves correct.
Warning that the “Great Lockdown” brought about around the world by the coronavirus (COVID-19) pandemic would cause the worst recession experienced internationally since the Great Depression of the 1930s, the IMF said Iran was inevitably in for another tough year following last year’s estimated 7.6% decline in economic output, although it added that the country might achieve growth of 3.1% in 2021. Previous forecasting from the World Bank that Iran might at least see a GDP stagnation of 0.0% in 2020 came before the coronavirus health and economic emergency and can thus be thrown in the waste paper basket.
The US sanctions-weary Iranian economy—one of the earliest affected by a COVID-19 outbreak, which is the worst in the Middle East—was also projected by the IMF to endure consumer price inflation of 34.2% and 33.5% this year and next year, respectively. Last year, the rate was an estimated 41.1%.
For Iran’s current account balance across 2019, 2020 and 2021, the IMF gave estimated figures of -0.1%, -4.1% and -3.4% of GDP, respectively.
For Iran’s unemployment rates across 2019, 2020 and 2021, the IMF
14 IRAN Country Report June 2020 www.intellinews.com
