Page 17 - IRANRptAug22

3.2 Macroeconomic outlook
World Bank upgrades 2022 GDP growth forecast for Iran to 3.7% on higher oil prices
IMF anticipates 3% growth for Iran in 2022
The World Bank has upgraded its 2022 GDP growth forecast for Iran to 3.7% from the 2.4% it anticipated six months ago, citing higher oil prices.
In the newly released June edition of its Global Economic Prospects report series, the international financial institution said: “Output in the Islamic Republic of Iran is expected to grow by 3.7 percent in 2022, boosted by the waning of the pandemic and higher oil prices. Growth is expected to slow subsequently, however, as unresolved structural challenges and feeble fixed investment limit the country’s growth potential.”
Suffering the severe blow of the reimposition of heavy US sanctions in 2018, Iran experienced a GDP contraction of 6.8% in 2019, prior to 3.4% growth in 2020. Growth last year was 4.1%, the World Bank estimated.
Iran, which in recent weeks has faced a growing number of cost-of-living protests, saw its official inflation rate remain elevated at 39% in May, the World Bank also noted.
Finally, the institution observed the threat that drought poses to Iran, saying: “With 70 percent of the [Middle East and North Africa] region’s agricultural production being rain-fed, below-average rainfall, along with unusually high temperatures, markedly weakened wheat yields in many parts of the region in early 2022.”
Iran has lost its self-sufficiency in wheat provision given its difficulties with persistent drought hitting crops.
Iran can expect GDP growth of 3% this year and 2% in 2023, according to the latest projection of the IMF released in its spring World Economic Outlook update, entitled “War sets back the global recovery”.
Those rates would follow last year’s 4%, the Fund said.
As for official inflation, the Fund sees 32.3% this year and 27.5% next year, compared to 2021’s 40.1%.
For the current account balance as a percentage of GDP, the IMF determined last year’s 2%% will be followed by 3.5% this year and 2% in 2023.
Official unemployment would remain at around 10% across this year and next, also according to the Fund’s forecasting.
The estimates might be subject to substantial change should Iran, the US and five other major powers find a path to restarting the 2015 nuclear deal that would lift heavy sanctions on Tehran. Iranian oil, for instance, could then freely flow to buyers across export markets.
In the introduction to its update, the IMF wrote: “Global economic prospects have worsened significantly since our last World Economic Outlook forecast in January. At the time, we had projected the global recovery to strengthen from the second quarter of this year after a short-lived impact of the Omicron variant. Since then, the outlook has deteriorated, largely because of Russia’s invasion of Ukraine—causing a tragic humanitarian crisis in Eastern Europe—and the sanctions aimed at pressuring Russia to end hostilities.
17 IRAN Country Report August 2022 www.intellinews.com