Iran's Economy from the Perspective of International Financial Organizations

Radio Farda has interviewed Fereydoun Khavand, an economics professor in Paris, about Iran's economy from the viewpoint of international financial organizations. In relation to the spring meeting of the International Monetary Fund (IMF) and the World Bank, which is being held today, Friday, April 21, in Washington, these two organizations are examining the outlook for the global economy and have published important data regarding Iran's economy. What perspectives do these two major financial institutions have on economic developments in Iran? Fereydoun Khavand - Regarding this meeting, the IMF published its well-known report titled 'Global Economic Outlook,' which, as always, includes data on Iran's macroeconomics, and the World Bank also released a report on 'Monitoring the Economy in the Middle East and North Africa,' which, being a regional report, naturally contains more information along with analyses from the organization's experts about Iran. In terms of Iran's macroeconomics, the data from the two organizations are more or less similar. They estimate Iran's economic growth rate in 2016 to be around 6.5 percent, but in 2017 and 2018 it is expected to revert to around four percent. Iran's inflation rate, which became single-digit for the first time in years in 2016 at nine percent, is expected to rise back to double digits this year and next. This is a summary of the assessment from both organizations regarding Iran's macroeconomic data and its developments over the next two years. Therefore, from the perspective of these organizations, neither Iran's high growth rate is sustainable nor is its single-digit inflation. Why is Iran's growth, as these two reports indicate, decreasing while inflation is rising again? The World Bank particularly explains the unsustainability of these two achievements in its report, stating that last year's economic growth was largely due to oil production and exports following the signing of the JCPOA and the lifting of sanctions. The previously unused capacities have been utilized again, and from now on, oil production will proceed at a slower pace. Additionally, problems arising from the implementation of the JCPOA have created many obstacles to foreign investment. A significant threat to Iran's economy, according to this organization, is the lack of political certainty regarding the implementation of the JCPOA, and if Iran's presidential elections exacerbate uncertainties, the country's economic growth will weaken. From the World Bank's perspective, what should Iran do to address its economic challenges? The prescription provided by the World Bank has been reiterated by a large number of Iranian experts for many years: to move away from an oil-dependent economy, especially through fundamental reforms and boosting non-oil exports. This is a way to cope with inflationary pressures and rising unemployment, which currently weigh heavily on Iran's economy.