Iran says its economy fell into a worse recession last year than international organizations expected, as the United States began re-imposing tough sanctions on Tehran’s vital oil industry and other financial sectors, VOA news reports.
In a report published Sunday, the Statistical Center of Iran said Iranian gross domestic product contracted by 4.9% in the last Persian year that ended on March 21.
The World Bank, a Washington-based institution that provides loans to countries, published a report earlier this month estimating that Iran’s GDP shrank by 1.9% in 2018 after growth of 3.8% in 2017. The International Monetary Fund, another global lending agency headquartered in Washington, released a report in April saying it found Iranian GDP contracted by 3.9% in 2018. Both agencies also predicted Iran’s recession will deepen this year, with the World Bank forecasting -4.5% growth and the IMF forecasting -6% growth.
President Donald Trump began re-imposing sanctions on various sectors of the Iranian economy last August, as part of a campaign to put “maximum pressure” on Iran to negotiate an end to its perceived malign activities. Trump’s predecessor had lifted those sanctions as part of a 2015 deal between Iran, the United States and five other world powers to let Tehran rejoin the global economy in return for limits to its nuclear program. Trump said the deal was not strong enough to prevent Iran from developing nuclear weapons or engaging in other destabilizing regional activities. Tehran denies pursuing such goals.
As part of his pressure campaign, Trump unilaterally sanctioned Iran’s oil exports, its main revenue source, in November. He also allowed several of Tehran’s customers to keep importing Iranian crude until requiring them to reduce imports to zero last month. None of them have announced any oil purchases from Iran since then.
Iran’s inflation and unemployment have worsened and its currency has slumped versus the dollar in tandem with the intensification of U.S. sanctions. The deteriorating economic conditions have prompted occasional street protests in various parts of the country over the past year, with demonstrators denouncing government officials and business leaders whom they accuse of oppression, mismanagement and corruption.
In a Monday interview with VOA Persian, New Jersey-based Iranian American economist Siamak Shojai of William Paterson University said Iran’s economy is in a “huge crisis” due to intensifying U.S. sanctions and the Shi’ite-majority nation’s continued involvement in regional conflicts pitting its proxies against some of its Sunni Arab neighbors and Israel.
“Iranian people have trouble meeting their daily necessities,” Shojai said. “Right now, Iran’s economy looks like it is on a war footing without a bullet having been fired.”
Patrick Clawson, research director at the Washington Institute for Near East Policy, attributed Iran’s worsening recession also to its Islamist rulers’ handling of the economy.
“It’s remarkable how a team of so-called moderates has managed to bungle economic policy,” Clawson told VOA Persian on Monday, in reference to the government of President Hassan Rouhani. “Iran’s current set of policies discourages exports, encourages imports and requires the government to use inflation [that results from printing money] to finance itself. It’s a stunningly bad mix,” he said.
But Clawson also gave the Rouhani government credit for releasing data that acknowledge Iran’s economic woes. “To be fair … this government has been ready to face up to bad news,” he said.