IMF Predicts Iran Economy to Return to Growth in 2021

EghtesadOnline: The International Monetary Fund expects Iran's economy to return to growth in 2021.

News ID: ۷۵۱۲۷۸

15 October 2020

In its latest World Economic Outlook report, the IMF forecasts 3.2% growth for Iran's GDP next year.

Projection for the current year's growth by the international organization, headquartered in Washington, D.C., is at -5%.

According to IMF, the Iranian GDP contracted by 6.5% in 2019.

The previous World Economic Outlook had predicted the real GDP to register a 3.1% growth next year after a contraction of -6% in 2020.

It said the Iranian economy shrank by -7.6 in 2019.

"The Covid-19 pandemic is inflicting high and rising human costs worldwide. Protecting lives and allowing healthcare systems to cope have required isolation, lockdowns and widespread closures to slow the spread of the virus. The health crisis is, therefore, having a severe impact on economic activity," reads the previous report.

“As a result of the pandemic, the global economy is projected to contract sharply by –3% in 2020, much worse than during the 2008–09 financial crisis. In a baseline scenario, which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound, the global economy is projected to grow by 5.8% in 2021 as economic activity normalizes, helped by policy support.”

Referring to the extreme uncertainty around the global growth forecast, The IMF report said the economic fallout depends on factors that interact in ways that are hard to predict, including the pathway of the pandemic, the intensity and efficacy of containment efforts, the extent of supply disruptions, the repercussions of the dramatic tightening in global financial market conditions, shifts in spending patterns, behavioral changes (such as people avoiding shopping malls and public transportation), confidence effects and volatile commodity prices.

“Many countries face a multilayered crisis comprising a health shock, domestic economic disruptions, plummeting external demand, capital flow reversals and a collapse in commodity prices. Risks of a worse outcome predominate," the report added.