Iran External Debt (% of GDP)

Iran likely grew at one of the slowest rates in MENA in the 2022 calendar year. Tough U.S. sanctions and Russian competition constrained crude output growth to 6%, notably below the expansions of other regional oil exporters. Moreover, elevated inflation and widespread social unrest from September will have harmed the non-energy economy. Heading into 2023, economic momentum seems to be easing further. Oil output rose only marginally year on year in January, and the parallel-market currency has slumped to a record low in recent weeks, which will be dampening consumers’ purchasing power. Gas shortages are further hampering economic activity. In politics, the FY 2023 budget presented in January projects an over-40% rise in nominal spending, which, together with an optimistic oil price assumption, suggests that the country will continue to run a sizable fiscal deficit ahead.