IMF expects Iran economy to shrink but less than oil-exporting peers
Latest estimates by the International Monetary Fund (IMF) shows the Iranian economy would be spared of the degree of contraction expected for oil-producing countries in the Middle East region despite the double pressure Iran is facing because of the pandemic and the US sanctions.
IMF’s October World Economic Outlook, published on Tuesday, showed Iran’s economy would shrink by 5.0 percent in 2020, lower than Saudi Arabia at a growth rate of minus 5.4 percent and the United Arab Emirates at minus 6.6 percent.
Tables provided in the report showed that Iran’s economy would be on path to return to positive economic growth in 2021 as the IMF expected the country’s gross domestic product (GDP) to grow by 3.2 percent next year, again ahead of Saudi Arabia at 3.1 and the UAE at 1.3 percent.
That comes as Iran has been effectively barred from freely supplying its crude to the international markets because of a series of sanctions imposed by the United States.
However, Saudi Arabia and the UAE have been pumping million of barrels of oil per day to shore up economies affected by global the spread of the coronavirus.
Iran has sought to use the US sanctions, enacted in November 2018 and toughened in May 2019, as an opportunity to diversify its economy away from oil revenues.
That has been the key to a better economic performance this year compared to 2019, as shown in IMF analysis, while the Iranian government is moving to further reduce its reliance on oil in the next fiscal year beginning March 2021.
The IMF report also predicted that inflation in Iran would decrease by more than 10 percent this year to stand at 30.5 percent while it would further reduce to 30.0 percent in 2021.
However, it showed Iran's unemployment rate would increase by less than two percent this year to stand at 12.2 percent and would remain largely unchanged at 12.4 percent in 2021.
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