Page 13 - IRANRptJul20

Pandemic-afflicted year puts Iran on course for 2020 GDP contraction of 6% says IMF
Looking at the effect of the world downturn on oil producers including Iran—although the US is attempting to force all Iranian oil off world markets—the World Bank observed: “In many oil exporters, growth will be significantly constrained by renewed policy cuts in oil production.”
In a note on how oil prices and consumption fare in global recessions, it added: “Prior to this year’s event, there have been four global recessions over the past 70 years: 1975, 1982, 1991, and 2009... In each of these episodes, there was a contraction in real per capita global output and broad-based weakness in multiple indicators of global economic activity.
“During these recessions, oil prices (and other industrial commodity prices) fell. The sharpest declines occurred during the global financial crisis, when oil prices fell by nearly 60 percent over three months. In most of these recessions, oil prices remained below pre-recession levels for several years.
“Oil consumption also typically fell during these episodes. The largest decline in oil consumption occurred in 1980-82, when consumption fell by a cumulative 9 percent from its peak in 1979. The supply-driven spike in oil prices in 1980, around the revolution in the Islamic Republic of Iran, contributed to the global recession in 1981-82, which further depressed oil consumption. In contrast, the two most recent recessions saw much smaller declines in oil demand. For the 2008-09 recession, this reflected the strong shift in global oil consumption towards China, which continued to grow robustly through the global financial crisis.”
Iran’s annual inflation rate has been falling lately, although it still remains elevated at around 20%, the World Bank also said.
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 estimated 13.6%, 16.3% and 16.7% of GDP, respectively.
The IMF said its latest forecasts were highly uncertain and that the risks were that the economic cost of the pandemic for all assessed countries could turn out to be worse than currently envisaged. Recovery would rely on stimulus
13​ IRAN Country Report July 2020 www.intellinews.com