Iran’s economy will sink deep in red: IMF

The International Monetary Fund yesterday predicted Iran’s economy will sink deep in the red due to renewed US sanctions but forecast increased Saudi growth on the back of higher oil production.

In its World Economic Outlook, the IMF said the oil-dependent economy of the Islamic republic is expected to shrink by 1.5 per cent this year and by 3.6pc in 2019. In May, before US President Donald Trump announced reinstating sanctions against Tehran, the IMF had projected Iran’s economy would grow by 4.0pc in 2018 and again next year. The IMF said the Iranian economy was now expected to contract over the next two years “on account of reduced oil production, before returning to modest positive growth in 2020–23”.

Trump withdrew the United States from the 2015 nuclear deal between Iran and world powers in May, and his administration reimposed a round of sanctions on the Islamic republic in August. Iranian crude exports, which reach some 2.5 million barrels per day normally, have plunged by over half a million bpd and are expected to dive further when expanded sanctions on oil take effect next month, depriving Tehran of its main source of income.

The IMF now projects the MENA region to grow by 2.0pc this year and 2.5pc in 2019, 1.2pc and 1.1pc lower, respectively, than it forecast in April. “The downward revisions reflect to an important extent the worsening of growth prospects for Iran, following the reimposition of US sanctions,” it said.