IMF Projects 39% Inflation, 11.2% Unemployment for Iran

In its new World Economic Outlook report titled “Managing Divergent Recoveries”, IMF projects consumer prices to fall to 27.5% in 2022.

Jobless rate projection for 2022 is at 11.7%.

The report expects Iran’s economy to grow by 2.5% in 2021.

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 13.4% growth in 2016, the year in which Iran’s nuclear deal with world powers, formally known as Joint Comprehensive Plan of Action, was implemented and international sanctions against the Islamic Republic were lifted.

The massive growth was followed by a further 3.8% in 2017. But with the withdrawal 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 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.”

IMF noted that 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,” he said.

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

SCI: Fiscal 2020-21 Consumer Inflation at 36.4% 

The average goods and services Consumer Price Index in the 12-month period ending March 20, which marks the end of the 12th month of fiscal 2020-21, increased by 36.4% compared with the corresponding period of the year before, latest data released by the Statistical Center of Iran show. 

SCI had put the average annual inflation rate for the preceding Iranian month, which ended on Feb. 18, at 34.2%. 

The consumer inflation for the month under review (Feb. 19-March 20) registered an increase of 48.7% compared with the similar month of the previous Iranian year. The year-on-year inflation of the month ending Feb. 18 was at 48.2%. 

The overall CPI (using the Iranian year to March 2017 as the base year) stood at 298.1 for the month ending March 20, indicating a 1.8% rise compared with the month before. The month-on-month consumer inflation was 2.5% for the 11th month.

SCI put the fiscal 2020-21 average annual inflation for urban and rural areas at 36.2% and 37.7%, respectively. 

CPI registered a year-on-year increase of 47.8% for urban areas and 53.3% for rural areas in the month ending March 20. 

The overall CPI stood at 294.9 for urban households and 316.1 for rural households, indicating a month-on-month increase of 1.8% and 1.6% for urban and rural areas, respectively.

The highest monthly growth in the index among 12 groups of the basket of consumer goods and services purchased by households in the Iranian month ending March 20 was recorded for two groups of “clothing and shoes” and “hotels and restaurants” with 4.7% while a monthly deflation of 0.1% was posted by “communications” group. 

The highest year-on-year inflation in the month under review was posted for “furniture, home appliances and their maintenance” with 68.3% while the lowest YOY inflation was registered for “communication” groups with 20.3%. 

The highest and lowest average annual inflation was registered for “transportation” with 65.6% and “communications” with 16.5%.

SCI: Q4 Unemployment Rate at 9.7%

Iran’s unemployment rate, the proportion of jobless population of ages 15 and above, stood at 9.7% in the fourth quarter of the last Iranian year (Dec. 21, 2020-March 20), indicating a 0.9% decline compared with the same period of the year before. 

According to the latest report by the Statistical Center of Iran, a total of 2,477,850 Iranians were unemployed in Q4. Men’s unemployment stood at 8.4% while the rate for women hovered around 16.5%. Over 1.79 million men and 685,934 women of ages 15 and above were jobless in Q4.   

The unemployment rate was 10.2% for urban areas (1.96 million people) and 8% for rural areas (508,580 people).

SCI put Q4 labor force participation rate—the proportion of the population of ages 15 and above that is economically active either employed or looking for job—at 40.9% or 25.61 million people, registering a 1.5% decrease year-on-year. 

Men’s and women’s economic participation rates were 68.5% and 13.3% respectively in the same period.

SCI reports that 21.44 million men and 4.16 million women of ages 15 and above were economically active in Q4, i.e., they were either employed or looking for a job.

The center provides two figures for the youth unemployment rate: the proportion of the population between 15 and 24 years and those between 18 and 35 years.   

The youth unemployment rate of those between 15 and 24 years stood at 23.6% in Q4, posting a 2.1% decrease while the unemployment rate of those between 18 and 35 years stood at 16.8%, posting a decline of 1% YOY.