IMF Predicts Severe Stagflation in Iran's Economy

With the return of U.S. sanctions against Tehran, the International Monetary Fund (IMF) has predicted severe stagflation in Iran's economy for the current and upcoming year. In contrast, this international body envisions better economic growth for Saudi Arabia. The IMF's latest assessment indicates that inflation in Iran is expected to reach 29.6% in 2018, with economic growth projected to be negative 1.5%. For 2019, the IMF forecasts inflation in Iran at 34.1% and economic growth at negative 3.6%. This prediction comes after the IMF had assessed Iran's economic growth at 12.5% and inflation at 9.1% in 2016. However, in 2017, Iran's economic growth was evaluated at 3.7%, although the inflation rate was slightly higher than in 2016, at 9.6%. The IMF, which oversees the global monetary system, provides crucial economic assessments for various countries. Nearly a year ago, it had expected Iran's economic growth in 2018 to exceed 4%, while other oil producers in the Middle East were expected to have near-zero growth. However, this prediction has changed with the return of the first round of sanctions against Tehran and the outlook for Iran's economy after the re-imposition of oil and financial sanctions in November. The IMF states that it expects Iran's economic situation to decline further due to reduced oil exports over the next two years, with a return to a relatively positive status projected for 2020-2023. Meanwhile, Saudi Arabia's economic growth, which was previously at 0.9%, is expected to rise to 2.2% this year and 2.4% in 2019, half a percent higher than previous estimates. Overall, countries in West Asia and North Africa are expected to grow by 2% in 2018 and 2.5% in the following year, although this growth is still less than previous assessments. Fereydoun Khavand, an economic analyst, previously told Radio Farda that despite the global economy recovering, West Asian and North African countries have suffered economically due to low oil prices in previous years, chaos and turmoil in the region, and security issues. This situation has taken on new dimensions with the Trump administration's withdrawal from the JCPOA and the return of U.S. sanctions against Iran. Reports indicate that Iran exported 2.1 million barrels of crude oil and 400,000 barrels of gas condensate daily last year. On October 5, the Saudi Crown Prince stated that his country, along with other oil-producing nations, had compensated for the reduction in Iran's oil exports, even doubling it. He claims that Iran's oil exports have decreased by up to 700,000 barrels per day. However, Iran's oil minister rejected Mohammed bin Salman's statements, stating that neither his country nor any other could produce that amount of oil. On October 17, AFP reported that Iran's oil exports had decreased by approximately half a million barrels, although a further decline is expected next month with the return of U.S. oil sanctions against Tehran. Other countries whose growth has significantly decreased in the IMF's latest assessment compared to previous estimates include Turkey, Mexico, Brazil, and Argentina.