The severe strain that US sanctions have placed on Iran was spelled out by the IMF this week when it forecast that the economy would contract by 9.5 percent this year, although the government of Hassan Rouhani insists that the worst is over. The IMF said that Iran had seen “a dramatic worsening of macroeconomic conditions” in the past two years and had experienced “severe distress”. “This is a rare [episode of] low economic growth in Iran’s contemporary history,” said one Iranian economist. “We didn’t have this in much of the war with Iraq [in the 1980s] and before that perhaps only when Iran was occupied by the Anglo-Soviet forces in the second world war.”
But the IMF forecast of zero economic growth for 2020 chimed with the Iranian government’s assertion that it has successfully curbed the crippling impact of sanctions. The World Bank last week also forecast that Iran’s economy had bottomed out, saying it would experience 0.5 per cent growth annually over the next two years. Iran’s economy was rocked in May 2018 when US president Donald Trump pulled out of the nuclear accord and imposed the toughest ever sanctions against the Islamic republic.
The national currency, the rial, declined by around 60 per cent last year, inflation jumped and oil exports – the country’s lifeline – declined from a peak of 2.8m barrels a day before the sanctions to an estimated few hundred thousands of barrels a day now.