UN Forecasts Iran's Economy to Shrink 2.7% in 2020

EghtesadOnline: The United Nations forecasts Iran's economy to shrink by 2.7% and 1.2% in 2020 and 2021 respectively.

News ID: ۷۴۹۵۹۷

02 February 2020

In its latest publication, "World Economic Situation and Prospects 2020", the UN estimated the country's GDP to have contracted by 7.1% in 2019 after a 2% contraction in the year before, according to Financial Tribune.

This is while, according to the world body, the Islamic Republic experienced a growth rate of 13.4% in 2016—the highest since 2012.

The UN has put Iran's average GDP growth at 3.9% between 1997 and 2011.

"Serious flooding, the reintroduction of sanctions by the United States and increasing tensions with Saudi Arabia have hit the economy hard, sending the country’s exports into a nosedive. Investment and private consumption growth have decelerated ... While the government has already increased spending to address challenges created by the economic recession, it will take several years for economic growth to return to positive territory. The country’s critical lack of economic diversification will continue to cloud its economic outlook," the UN publication reads.

Iran, in particular, is highly exposed to the effects of an energy transition owing to its extremely high dependence on fossil-fuel assets, which are at substantial risk of becoming stranded, it added.

The UN has also forecast that consumer price inflation in Iran will be at 32.4% and 27.8% in 2020 and 2021 respectively.

Estimate for 2019 inflation rate stands at 33.5%.

A UN review of inflation rates in Iran since 2011 shows the country saw the lowest rate of 8.7% in 2016.

As for unemployment, the UN estimated the rate to have reached 12.8% in 2019.

A review since 2011 shows the country experienced the lowest rate of 10.4% in 2013.

The World Economic Situation and Prospects 2020 is a joint product of the United Nations Department of Economic and Social Affairs (UN DESA), the United Nations Conference on Trade and Development and the five United Nations regional commissions: Economic Commission for Africa (UNECA), Economic Commission for Europe (UNECE), Economic Commission for Latin America and the Caribbean (UNECLAC), Economic and Social Commission for Asia and the Pacific (UNESCAP) and Economic and Social Commission for Western Asia (UNESCWA).

The United Nations World Tourism Organization (UNWTO), UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS) and the International Labour Organization (ILO) also contributed to the report.