IMF predicts 2.5% rise in Iran’s GDP in 2021

The International Monetary Fund expects Iran’s economy to grow by 2.5% in 2021.

10 April 2021
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The International Monetary Fund expects Iran’s economy to grow by 2.5% in 2021.

A woman walks past an International Monetary Fund headquarters(IMF) building in Washington, DC on April 5, 2021. Photo: AFP

The International Monetary Fund expects Iran’s economy to grow by 2.5% in 2021.

In its new World Economic Outlook report titled “Managing Divergent Recoveries”, IMF has put Iran’s GDP growth in 2020 at 1.5%. Projection for 2022 is at 2.1%.

According to IMF, the country experienced a 13.4% growth in 2016, the year Iran’s nuclear deal with world powers, formally known as the Joint Comprehensive Plan of Action, was implemented, i.e., international sanctions against the Islamic Republic were lifted.

The massive growth was followed by a further 3.8% in 2017. But with the walkout of the US from JCPOA under the administration of Donald Trump and introduction of new rounds of sanctions, the Iranian economy shrank by 6% and 6.8% in the following two years.

In its preface, the “Managing Divergent Recoveries” report refers to implications of Covid-19 for the world economy and says: “We are now projecting a stronger recovery in 2021 and 2022 for the global economy compared to our previous forecast, with growth projected to be 6% in 2021 and 4.4% in 2022. Nonetheless, the outlook presents daunting challenges related to divergences in the speed of recovery both across and within countries and the potential for persistent economic damage from the crisis.”

The report noted that the divergent recovery paths are likely to create significantly wider gaps in living standards between developing countries and others, compared to pre-pandemic expectations. 

“Cumulative per capita income losses over 2020–22, compared to pre-pandemic projections, are equivalent to 20% of 2019 per capita GDP in emerging markets and developing economies [excluding China] while in advanced economies, the losses are expected to be relatively smaller, at 11%. This has reversed gains in poverty reduction, with an additional 95 million people expected to have entered the ranks of the extreme poor in 2020, and 80 million more undernourished than before,” it added.

Besides the pandemic, Iran’s economy has been grappling with the US “maximum” pressure campaign under the administration of former US president, Donald Trump. The new government led by Joe Biden is looking to revive JCPOA.