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IMF slashes Mideast growth projections over Iran sanctions
DUBAI, July 23, 2019 (BSS/AFP) – The International Monetary Fund Tuesday
slashed its economic growth forecast for the Middle East and North Africa to
the worst level in more than a decade over Iran sanctions and regional
unrest.
In its World Economic Outlook update, the global lender projected economic
growth for the Middle East, North Africa, Afghanistan and Pakistan this year
would be 1.0 percent, its worst since the IMF put them in one group in 2009.
The downgrade, the fifth in a year, is a half percentage point lower than
its April projection.
The reduction is in large part due to a change in the IMF’s forecast for
Iran’s growth “owing to the crippling effect of tighter US sanctions,” the
lender said.
“Civil strife across other economies, including Syria and Yemen, add to the
difficult outlook for the region.”
The price of oil, the main driver for revenues in the region, will also
impact growth, the IMF added.
In 2018, the region saw 1.6 percent growth, down from 2.1 percent in the
previous year.
The IMF in April projected Iran’s economy will shrink by a steep 6.0
percent this year, its worst performance since it contracted by 7.7 percent
in 2012.
The new report provided no updated figures on the Iranian economy, the
second largest in the region behind Saudi Arabia, but other reports predicted
a deeper recession in the Islamic republic.
One report jointly prepared by the London-based Institute of Chartered
Accountants in England and Wales and Oxford Economics, released early this
week, said Iran’s economy is expected to shrink by 7.0 percent this year.
The report also predicted regional growth to be just 0.6 percent due to
Iran sanctions and instability in the region.
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US sanctions on Iranian oil exports were renewed in May and aim to halt
Tehran’s overseas crude sales, which provide key revenues to the Islamic
republic.
The IMF also attributed the lower growth projections to rising US-Iran
tensions centred on recent incidents in the Gulf and unrest in several Arab
nations.
“Civil strife in many countries raises the risks of horrific humanitarian
costs, migration strains in neighbouring countries, and, together with
geopolitical tensions, higher volatility in commodity markets,” the IMF said.
The IMF raised its forecasts for Saudi economic growth this year by 0.1
percentage points, to 1.9 percent, and to 3.0 percent in 2020.
It attributed the boost to the development of the kingdom’s non-oil-related
sectors.
The world’s largest oil exporter has substantially cut power and fuel
subsidies as well as imposed fees on expatriates and a five-percent value
added tax as part of a reform programme to decrease dependence on oil.
BSS/AFP/SR/1940 HRS