IMF's Pessimism About Iran's Economic Future

Radio Farda - In the International Monetary Fund's report on "Global Economic Outlook," published on Tuesday, there are also predictions regarding Iran. Reza Valizadeh, in an interview with Fereydoun Khavand, an economist based in Paris, asked about the predictions in this report. Fereydoun Khavand: The average global economic growth for this year, 2015, is predicted by the IMF to be 3.5 percent, with a slight increase compared to the past two years. However, this relatively low growth is unevenly distributed among countries. Among advanced industrial countries, the United States, with a growth rate slightly above three percent, remains in first place. Although the U.S. has been negatively affected by the strengthening dollar, which has reduced its exports, overall, considering the drop in energy prices, very weak inflation, improved financial conditions of businesses, favorable stock market conditions, and rising housing prices, the country is in a relatively good economic situation. In the Eurozone, growth rates are significantly lower than in the U.S., but the economies in this region have benefited from two positive factors: one is the drop in oil prices, and the second is the decline in the value of the euro. However, many developing countries have lower economic growth due to the fall in commodity prices, including oil, compared to a few years ago. In emerging powers, the growth rate is also relatively low, with Brazil even facing a negative growth forecast. What about Iran? What predictions does the IMF have regarding the country's macroeconomic indicators? The IMF's forecast for Iran is overall pessimistic. For last year, 2014, the IMF assessed Iran's economic growth at 3 percent, which is not far from what Iranian economic officials have stated for the year 1393. But for this year, 2015, the forecast is very discouraging: a growth rate of 0.6 percent, the lowest level among regional countries, an inflation rate of 16.5 percent, and an unemployment rate of 12.5 percent. For next year, the outlook from the IMF is not much better: a growth rate of 1.3 percent, an inflation rate of 17 percent, and an unemployment rate above 13 percent. Has the IMF taken into account the potential impact of a final agreement on Iran's nuclear file in its assessments? I think this variable has not been considered. By calculating the positive economic consequences of lifting sanctions, Iran's growth rate will likely be at a level higher than the IMF's predictions, at least in 2016. However, long-term growth of Iran's economy will be secured when the country can create the conditions for long-term investment and productivity increases. This is another discussion.