Iran Economic Forecast

Iran Economic Outlook

June 4, 2019

The economy remains under siege from U.S. sanctions, which are ravaging the public coffers and fueling inflationary pressures. According to the EIA, oil production in Q1 was down roughly 1.2 million barrels per day (mbpd) from Q1 2018, and dropped a further 0.3 mbpd in April relative to March. Moreover, after the U.S. scrapped sanction waivers on Iranian oil imports effective 1 May, Iran exported just 0.4 mbpd of oil in May (May 2018: 2.5 mbpd), according to tanker-tracking data. Exacerbating matters, recent flash floods displaced over half a million people, which likely further hampered domestic economic activity. Meanwhile, tensions between the U.S. and Iran have continued to escalate: In mid-May, government officials in Washington accused Iran of attacking oil tankers in the Strait of Hormuz, which will further depress business sentiment and heightens the risk of armed conflict.

Iran Economic Growth

Iran’s economy is expected to contract severely in SH 2019. Economic sanctions will batter oil exports, while the weaker rial in the parallel market will fuel inflation and erode consumers’ purchasing power. Fractious relations with the U.S., regional geopolitical tensions, a flagging banking sector and vulnerability to oil price swings pose downside risks to the outlook. Panelists see the economy contracting 4.8% in SH 2019, which is down 0.7 percentage points from last month’s forecast, before growing 0.7% in SH 2020.

Iran Economy Data

20132014201520162017
Population (million)77.478.579.580.581.4
GDP per capita (USD)5,6295,4514,9315,272-  
GDP (USD bn)436428392424-  
Economic Growth (GDP, annual variation in %)-0.24.6-1.313.4-  
Consumption (annual variation in %)-  -  -  -  -  
Unemployment Rate11.511.511.812.512.1
Fiscal Balance (% of GDP)-0.9-1.1-1.7-2.2-  
Public Debt (% of GDP)11.711.841.648.911.9
Money (annual variation in %)38.822.330.023.2-  
Inflation Rate (CPI, annual variation in %, eop)19.616.28.411.88.3
Inflation Rate (CPI, annual variation in %)34.715.611.99.09.6
Exchange Rate (vs USD)24,77427,13830,13032,37636,074
Exchange Rate (vs USD, aop)18,54426,01629,12831,00233,384
Current Account (% of GDP)5.83.20.33.9-  
Current Account Balance (USD bn)25.113.61.216.4-  
Trade Balance (USD billion)29.318.15.420.8-  
Exports (USD billion)92.989.063.084.0-  
Imports (USD billion)63.670.957.663.1-  
Exports (annual variation in %)-4.5-4.2-29.233.3-  
Imports (annual variation in %)-7.511.5-18.79.5-  
International Reserves (USD)118126128121-  

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