Page 12 - IRANRptAug20

3.1​ ​Macroeconomic outlook
Iran’s coronavirus-hit GDP to shrink 5.3% in 2020 says World Bank
Iran will likely have to reckon with a GDP contraction of 5.3% in 2020, partly reflecting the effects of its large-scale coronavirus (COVID-19) outbreak on domestic consumption and the services sectors, according to the June edition of the World Bank’s Global Economic Prospects report released on June 8.
In the January edition, released before the shock impact of the coronavirus pandemic, the international financial institution was predicting that Iran would have flat growth at exactly 0.0% following its two years of recession triggered by the reintroduction of US sanctions. Iran can at least look forward to 2.1% of growth next year if the World Bank’s latest forecasting proves correct. In January, it was only predicting 1%.
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
12​ IRAN Country Report August 2020 www.intellinews.com