Iran Economic Outlook
February 11, 2020
The economic outlook worsened over the past month, after the U.S. implemented fresh sanctions on Iran’s manufacturing and metal industries, which are expected to punish Iran’s non-oil private sector. Moreover, energy production continued to decline year-on-year in December, albeit at a softer pace than in recent months, while elevated inflationary pressures are continuing to deplete consumers’ purchasing power. That being said, the labor market continued to tighten in September–December, likely due to higher domestic production substituting previously imported goods. Meanwhile, in politics, the Trump administration agreed to lift Iranian oil export sanctions for one of two divisions of the Chinese tanker company COSCO. The decision followed the “phase one” trade deal and the U.S. Treasury stressed that its “maximum pressure campaign continues as before”.Iran Economic Growth
In SH 2020, the economy is seen contracting again, due to the latest round of sanctions which, will deal a blow to the non-oil private sector, while the oil economy remains crippled by prior sanctions. That said, the overall decline will be noticeably softer due to a low base effect. An escalation of the conflict with the U.S. poses a significant downside risk to the outlook. Panelists see the economy contracting 0.6% in SH 2020, which is down 0.5 percentage points from last month’s forecast. In SH 2021, the economy is seen growing 1.9%.Iran Economy Data
| 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|
| Population (million) | 78.5 | 79.5 | 80.5 | 81.4 | 82.4 |
| GDP per capita (USD) | 5,642 | 4,931 | 5,272 | 5,635 | - |
| GDP (USD bn) | 443 | 392 | 424 | 459 | - |
| Economic Growth (GDP, annual variation in %) | 4.6 | -1.3 | 13.4 | 3.8 | - |
| Consumption (annual variation in %) | - | - | - | - | - |
| Unemployment Rate | 11.5 | 11.8 | 12.5 | 11.9 | 12.0 |
| Fiscal Balance (% of GDP) | -1.1 | -1.6 | -1.9 | -1.8 | - |
| Public Debt (% of GDP) | 11.8 | 38.4 | 47.5 | 39.5 | - |
| Money (annual variation in %) | 22.3 | 30.0 | 23.2 | 22.1 | - |
| Inflation Rate (CPI, annual variation in %, eop) | 14.3 | 8.4 | 8.2 | 7.2 | 47.5 |
| Inflation Rate (CPI, annual variation in %) | 14.6 | 11.1 | 6.9 | 8.3 | 26.8 |
| Exchange Rate (vs USD) | 27,138 | 30,130 | 32,376 | 36,074 | 42,000 |
| Exchange Rate (vs USD, aop) | 26,016 | 29,128 | 31,002 | 33,384 | 37,331 |
| Current Account (% of GDP) | 3.1 | 0.3 | 3.9 | 3.4 | - |
| Current Account Balance (USD bn) | 13.6 | 1.2 | 16.4 | 15.8 | - |
| Trade Balance (USD billion) | 18.1 | 5.4 | 20.8 | 22.6 | - |
| Exports (USD billion) | 89.0 | 63.0 | 84.0 | 98.1 | - |
| Imports (USD billion) | 70.9 | 57.6 | 63.1 | 75.5 | - |
| Exports (annual variation in %) | -4.2 | -29.2 | 33.3 | 16.9 | - |
| Imports (annual variation in %) | 11.5 | -18.7 | 9.5 | 19.7 | - |
| International Reserves (USD) | 126 | 128 | 121 | 112 | 108 |
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