fbpx

News

IMF says Iran’s economy will shrink by 6 per cent

[ssba]

The International Monetary Fund (IMF) has said that Iran’s economy is expected to shrink by 6 per cent in 2019 and inflation could reach 40 per cent.

Speaking about the IMF’s latest annual report, Jihad Azour, the Middle East and Central Asia Department director, said: “A negative growth of 6 per cent has an impact on poverty, social protection and also on jobs. Clearly the re-imposition of sanctions and the removal of the waivers will have additional negative impact on the Iranian economy both in terms of growth and in terms of inflation, where inflation could reach 40 percent or even more this year.”

The IMF predicts a 6 per cent decrease in economic growth in 2019, but that does not factor in the recent announcement by the US that waivers on Iranian oil exports will expire next week, further deepening Iran’s economic recession.

Iranian oil production is estimated to fall to 1.9 million barrels per day in the second half of 2019, from 3.6 million barrels per day in the end of 2019. Oil prices were $71.75 per barrel yesterday, after falling below $50 per barrel in January. The IMF said swings in oil prices are being impacted by global trade tensions, US sanctions on Iranian oil exports and oil production cuts by OPEC and other oil producing nations.

Oil prices surged by around 40 percent between January and April, due to US sanctions on producers Iran and Venezuela as well as supply cuts by other oil exporting countries.

According to the Iranian newspaper, the Daily Economic News, inflation on food products has reached 46 per cent. The IMF said Iranian authorities should take steps to alleviate the economic pain in the short term, including bringing the official exchange rate in line with market forces and address weaknesses in the financial system by complying with anti-money laundering and terrorism financing laws.

Authorities also need to “fix or expand their social protection mechanisms to address the additional vulnerabilities” for the poor, the IMF said.

The IMF predict that economic growth for the Middle East is expected to slow down from close to 2 per cent last year to about 1.5 per cent in 2019. Inflation is expected to remain unchanged at close to 10 per cent.