Page 15 - IRANRptOct20

Pandemic-afflicted year puts Iran on course for 2020 GDP contraction of 6% says IMF
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 measures proving effective in forestalling widespread company bankruptcies, limiting job losses and easing financial strains. The WEO modelled three alternative scenarios: a 2020 lockdown lasting 50% longer than it is forecasting; a mild recurrence of the virus in 2021; and a protracted pandemic and longer containment effort in 2020, as well as a recurrence in 2021. In the worst case, the global economy would shrink by around 11% rather than 3% this year, it said.
Gita Gopinath, the IMF’s economic counsellor, said the global economy was suffering a crisis “like no other”.
She added: “It is very likely that this year the global economy will experience
15​ IRAN Country Report October 2020 www.intellinews.com