Iran’s economy rebounded out of a recession after the nuclear deal with world powers, the International Monetary Fund said today, though uncertainty over future sanctions and problems plaguing the country’s domestic banks could cause fiscal trouble ahead.
Iran’s real gross domestic product grew by 7.4 per cent, buoyed by the quick re-entry of Iranian oil on the international market, according to the IMF. Inflation also dropped to single digits while GDP growth is expected to stabilise around 4.5 per cent, the IMF said.
But ordinary Iranians largely have yet to see any of the benefits from the nuclear accord, which saw some international sanctions lifted in exchange for Iran limiting its uranium enrichment.
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Meanwhile, concerns persist about what a harder line, promised by the administration of US President Donald Trump, will mean for the Islamic Republic.
“The lifting of sanctions and (Iran’s) ambitious reform agenda are yet to produce their full beneficial impact on the Iranian economy,” Jafar Mojarrad, an IMF executive director, wrote in an addendum to the report.
“Regrettably, remaining US sanctions and related uncertainty have hindered the return of global banks to the Iranian market and continue to hamper large-scale investment and trade.”
The IMF estimates Iran lost $185 billion in revenue from oil production due to sanctions since 2011. In the time since, global oil prices dropped by highs over USD 100 a barrel in mid-2014 before bottoming out below USD 30 a barrel in January 2016, representing a loss of USD 166 billion on its own to Iran, the IMF said.
It described the two events as “twin shocks” to Iran’s economy.
While oil is now trading over USD 50 a barrel, that alone can’t drive Iran’s economy. The IMF cautioned that economic growth outside of the oil industry was just 0.9 percent, “reflecting continued difficulties in access to finance and depressed consumption.”