IMF Sees Deeper Iran Recession Hitting Regional Growth

The International Monetary Fund on Tuesday worsened its forecast for Iran's recession as US sanctions bite, with Tehran's slump denting overall growth in the Middle East and North Africa. 

The global lender's World Economic Outlook projected Iran's economy will shrink by a massive 6.0 percent this year, its worst performance since it contracted by 7.7 percent in 2012.

The latest figure represented a sharp deterioration from October's prediction of a 3.6 percent contraction, as US sanctions batter the Islamic Republic's crucial oil sector. 

The report also estimated that Iran's economy, the second largest in the region behind Saudi Arabia, shrunk by 3.9 percent in 2018, as opposed to 1.5 percent projected earlier.

The prediction of deeper pain for Iran, lower oil growth and civil strife saw the IMF cut its overall forecast for the Middle East and North Africa to 1.3 percent, down 0.9 percent from January.

"The outlook for the region is weighed down by multiple factors, including slower oil GDP growth in Saudi Arabia... US sanctions in Iran and civil tensions and conflict across several other economies, including Iraq, Syria, and Yemen," the IMF said.

It maintained its projections for Saudi Arabia, saying the region's leading economy is expected to grow by a muted 1.8 percent this year and 2.1 percent in 2020.

The IMF said it expected the kingdom's growth, which reached 2.2 percent last year, to stabilize at a modest rate in the medium term due to the subdued outlook for oil prices and output. 

Overall the wider regional economy is projected to improve in 2020 to a healthy growth rate of 3.2 percent, the IMF said.

The international lender expects oil prices to average around $59 a barrel this year and next, down from its October projections of above $65 a barrel.

Photo Credit: Wikicommons

Europe Support Against US 'Rare Victory' for Iran: Rouhani

President Hassan Rouhani said Saturday that the divisions between the US and Europe over renewed sanctions on Iran were a "rare historical victory" for the Islamic republic.

"If this time last year, we had stated that America would stand against the great nation of Iran... and Europe would stand with Iran and against America, the overwhelming majority of us... would have said that this was pure optimism," Rouhani told lawmakers in a televised address. 

"The political victory of the great nation of Iran over the past months is a rare victory in history."

EU countries have fiercely opposed the decision by US President Donald Trump to abandon their landmark 2015 nuclear deal with Iran and reimpose sanctions—the last of which will return on November 5. 

Rouhani was addressing parliament for a special session to approve four new ministers covering the portfolios of economy, transport, labour and industry.

He acknowledged Iranians were feeling the economic strain, saying: "All of us understand people are suffering and under pressure. People's lives, in particular those on a fixed income, are very difficult."

But he insisted there were sufficient reserves of basic commodities and foreign currency to weather the storm, even after a record-breaking plunge in the rial over the summer and imminent sanctions on its crucial oil industry. 

"We cannot tell our people that because of America's pressure, we cannot do anything. This answer is not acceptable. We cannot tell people that because there are problems with selling our oil, we are unable to manage the country," he said.

He criticized foreign media reports that costs were soaring, despite Iran's own central bank showing food and drink prices had risen 46.5 percent in the year to September. 

"Foreign media lie to people of Iran and say that Iran is the most expensive country people live in," Rouhani said.

Lawmakers later approved the four names put forward by Rouhani: Farhad Dejpasand as economy minister, Mohammad Eslami for transport, Reza Rahmani for industry and Mohammad Shariatmadari for labour. 

The previous economy and labour ministers were impeached by parliament in August, while the other two resigned last week. 

Photo Credit: IRNA