IFC: Recession Will Increase in Iran, and Reserves Will Drop
Expectations of a recession in the Iranian economy
The institute added in a report that Iran's economy contracted 4.6 percent in the 2018-2019 fiscal year, and the contraction is expected to worsen to 7.2 percent in the current fiscal year.
The United States imposed sanctions on 17 entities of mineral producers and mining companies in Iran last week, in response to an Iranian attack targeting US forces in Iraq in retaliation for the killing of Qassem Soleimani, commander of the Qods Force in the Iranian Revolutionary Guard.
Iran is not a major metal producer, but sanctions increase the pressure on the economy, which is hindered by a decline in the volume of exports of crude oil and condensates, which has fallen to less than 0.4 million barrels per day in the past few months, after peaking at 2.8 million barrels per day in May 2018.
Iran's oil revenues had increased after the conclusion of the nuclear agreement between Tehran and world powers in 2015, which put an end to the sanctions regime imposed on Iran three years earlier because of its controversial nuclear program, but new sanctions were reimposed after US President Donald Trump withdrew from the agreement in 2018 It is the most painful US sanctions against Tehran.
If the US sanctions persist, the International Finance Institute said, "after two years of severe recession, growth will remain weak in the medium term, the unemployment rate will rise further to exceed 20 percent, and official reserves will continue to decline to about 20 billion dollars by March 2023," Reuters reported.
The institute pointed out that "if the US sanctions are lifted, the growth of the Iranian economy may exceed six percent annually, and that the reserves resume their rise to 143 billion dollars, and the GDP may double to double to 639 billion dollars by March 2024."