International Monetary Fund: Iran's GDP Growth After Sanctions Eased

The latest report from the International Monetary Fund, published on Monday, October 12, states that Iran's GDP growth will reach 4.5% this solar year. The report adds that Iran's GDP has significantly increased in the first half of the year due to the easing of sanctions following the implementation of the nuclear agreement with six world powers (JCPOA). "Oil production and exports have quickly returned to pre-sanction levels." According to assessments by IMF experts who recently visited Iran, increased activity in agriculture, automobile production, trade, and transportation services has contributed to growth in the non-oil industries: accordingly, it is predicted that Iran's economic growth will be at least 4.5% this solar year. The report continues that cautious financial and monetary policies have been implemented in recent years, and point-to-point inflation reached 6.8% in June. "Although this figure rose to 9.5% in September, the average inflation for this solar year is estimated to be around 9.2%." The IMF believes that the Iranian government is undertaking ambitious reforms to support the growth rate. According to the report, Iran has not only decided to compensate for past setbacks but has also planned to reinvest in banks while simultaneously strengthening financial oversight. "New laws to combat money laundering and terrorism have been passed. In this context, the government has committed to enhancing security in the financial sector to improve the country's access to the global financial system." The IMF's assessment indicates that if Iran wants to realign itself with the global economy, create economic growth, and become a market-oriented country with a diversified economy, it must implement fundamental economic reforms. The report also notes weaknesses in the country's economy that threaten Iran's economic achievements. The IMF states that "since the second half of last solar year, when the economy was very weak, the government has tried to create economic growth by directing bank credits to designated sectors and reducing interest rates." On the other hand, according to this report, given current policies, the trade deficit in the non-oil sector will increase by 0.5% this year, reaching 8.9% of GDP excluding oil (or 7.7% of total GDP). Additionally, the amount of oil revenue injected into the budget will decrease, as the loan received from the National Development Fund of Iran last year must be repaid. As a result, it is predicted that the overall financial deficit will rise from 1.7% last year to 2.7% of GDP this year. Iran's foreign reserves have also decreased by $7 billion compared to the beginning of 2016. This trend indicates changes in value, the need for foreign currencies, and increased imports following the implementation of the JCPOA.