DUBAI: Iran’s economy is expected to shrink by 9.5 percent this year, compared to a prior estimate of a six percent contraction, the International Monetary Fund (IMF) said, but real gross domestic product (GDP) growth is expected to be flat next year.
“The estimate is that … sanctions that were reintroduced last year and tightened this year, next year will not have an additional impact,” Jihad Azour, director of the IMF’s Middle East and Central Asia Department, told Reuters.
A drop in the Iranian currency following the reimposition of sanctions has disrupted Iran’s foreign trade and boosted annual inflation, which the IMF forecasts at 35.7% this year and 31% next year.
Azour said the Iranian authorities should align the official exchange rate with the market rate to control inflation.
The IMF forecast Iran’s exports of goods and services to drop to $60.3 billion this year from $103.2 billion last year, and to fall further to $55.5 billion in 2020.
The IMF also said Iran would need oil priced at $194.6 a barrel to balance its budget next year.
Hurt by tighter US sanctions, Iran – a key member of the Organization of the Petroleum Exporting Countries (OPEC) – is expected to have a fiscal deficit of 4.5 percent this year and 5.1 percent next year, the fund said in a report on Monday.
On Friday, international benchmark Brent crude closed trading at just above $62 a barrel.
Iran saw its oil revenues surge after a 2015 nuclear pact agreed with six major powers ended a sanctions regime imposed three years earlier over its disputed nuclear programme.
But new sanctions brought in after US President Donald Trump withdrew from that deal in 2018 are the most painful imposed by Washington.
