Page 13 - IRANRptFeb19

3.0 Macro Economy
3.1 Macroeconomic overview
IMF sees inflation in Iran breaching 40% by year’s end
Iran records Persian Q1 GDP growth of 1.8%
On November 13, the IMF predicted that inflation in Iran will leap to more than 40% by the end of 2018. In a report on Middle Eastern economies, the Fund also repeated a previous forecast released in its latest World Economic Outlook on October 8 that the ultra-aggressive US sanctions regime would push Iran's economic output down by 1.5% in 2018 and 3.6% in 2019.
"This [recession] largely reflects the expected impact of the reimposition of US sanctions on Iran, which is likely to reduce Iranian oil production and exports significantly over the next two years at least," the IMF said.
Iran's economy expanded by 12.5% in 2016 after global sanctions were removed under the Islamic Republic’s 2015 nuclear deal with six major powers (including the US which unilaterally walked out of the accord in early May this year). The country’s GDP expansion was measured at a much less impressive 3.7% last year after Donald Trump came to power and showed immediate hostility to Iran, thereby reversing a lot of previously positive investor sentiment on its economic prospects.
In the new report, the IMF's Middle East director, Jihad Azour, said one of the most urgent issues facing Iran as it deals with the consequences of the Trump administration’s sanctions was the need to align the official currency-exchange rates for the rial with black market rates.
Iran’s GDP grew 1.8% y/y in the first quarter of the Persian year (ended June 21), the Central Bank of Iran (CBI) said on September 16.
Iranian economic growth is expected to move into negative territory in the second Persian quarter because the worst effects of the collapse of the Iranian rial (IRR) set in during that three-month period. The currency has lost more than 70% of its value over six months with the economic pressure generated by Washington’s reimposition of sanctions on Tehran taking a heavy toll.
The anaemic growth rate seen in the first quarter stands in stark contrast to the figure recorded for the same period of the previous Persian year, namely 4.6%.
13 IRAN Country Report February 2019 www.intellinews.com