The impact of US sanctions on Iran’s economy is projected to peak this year, with growth resuming in 2020, according to the June issue of the World Bank’s twice-yearly Global Economic Prospects report, released on May 4.
Iran was thrown back into recession last year by the Trump administration’s decision to reapply sanctions, suffering an economic contraction of 1.9%, following 2016 growth of 13.4% (in the wake of the 2015 nuclear deal, which protected the country from heavy sanctions prior to the US change of policy in May 2018) and 2017 growth of 3.8%. The World Bank’s latest forecast is for Iranian GDP to contract 4.5% in 2019, but to grow 0.9% in 2020.
Iran’s annual inflation rate rose sharply from about 10% in mid-2018 to about 52% in April 2019, while the Iranian rial (IRR) on the unofficial parallel market sank more than twofold compared to levels prior to the announcement that US sanctions were on the way back, the World Bank noted.
“Growth in Iran is expected to resume in 2020-21, albeit at weak rates, as the impact of U.S. sanctions tapers and inflation stabilizes,” it added.
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