Iran sanctions, unrest hurting Middle East growth: IMF

Iran sanctions, unrest hurting Middle East growth: IMF
2 min read
30 April, 2019
The IMF warned that prospects for the Middle East are 'clouded by elevated levels of uncertainty', amid US sanctions on Iran and rising unrest across the region.
International Monetary Fund warns rising unrest is slowing economic growth in the Middle East [AFP/Getty]
US sanctions on Iran, rising unrest in the Middle East, and North Africa and oil price volatility are dragging regional economic growth, the International Monetary Fund (IMF) said on Monday.

The IMF warned in a bi-annual economic outlook report that prospects for the region are "clouded by elevated levels of uncertainty".

"Such uncertainty may increase investors' perception of risk for the whole region, leading to capital outflows and exchange rate pressure," it said.

The IMF forecasts the economy in Iran, the second-largest in the region behind Saudi Arabia, will shrink by 6 percent this year after contracting by 3.9 percent in 2018.

The bad news for Tehran comes after the US reimposed sanctions last year following its withdrawal from the landmark 2015 nuclear accord.

Jihad Azour, IMF Middle East and Central Asia director, said the dire projection was made before the US tightened up measures targeting Iran's oil industry last week - meaning the pain could get even worse.  

President Donald Trump announced the US will no longer grant sanctions exemptions to Iran's oil customers, potentially punishing allies such as India as it tries to squeeze Tehran's top export.

Azour said sanctions have already pushed inflation in Iran to around 50 percent. Iran's woes have a knock-on effect on regional figures.

Overall regional economic growth was expected to remain subdued at 1.3 percent this year from 1.4 percent in 2018.

For oil exporters, growth was down at 0.4 percent for 2019, while importing countries were expected to increase at 3.6 percent this year, from 4.2 percent in 2018. 

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