IMF: Iran risks return to recession if nuclear accord is derailed

By bne IntelliNews March 1, 2017

Iran risks returning to the recession it was enduring a year ago if the nuclear deal with major powers that paved the way for the present post-sanctions era comes off the rails, the International Monetary Fund said on February 27.

While the Iranian economy has experienced an “impressive recovery” since sanctions were lifted in January last year and should deliver annual growth of 6.6% in the Persian year ending on March 21, the growing tensions with the US Trump administration and related uncertainties about progress under the nuclear accord could undermine economic expansion, the IMF added.

“If the agreement is derailed, the economy could risk recession,” the IMF said in an update on Iran’s economic performance.

Iran, which has the fourth largest oil reserves in the world, has made substantial economic headway largely thanks to a doubling of its oil production since sanctions were withdrawn.

But the IMF cautioned that deteriorating relations between Tehran and Washington “could deter investment and trade with Iran and short-circuit the anticipated recovery”.

Despite Donald Trump’s hostility to the nuclear deal with Iran, the accord enjoys firm backing from the UK, Germany, France, Russia and China, which, along with the US under previous President Barack Obama, signed it.

In its report, the IMF commended the Rouhani administration in Iran for maintaining single-digit inflation - it is presently at 8.7%.

The Fund also called on Tehran to fully implement a plan drawn up with the Paris-based Financial Action Task Force, an organisation that combats money laundering and the financing of terrorism.

Iran’s efforts at plugging back into the world financial system are being hindered by some sanctions against Tehran retained by the US in response to alleged Iranian sponsorship of regional terrorism. Banks linked to the American financial system are wary that by getting involved in trade and investment centred on the Islamic Republic they could unwittingly end up assisting money laundering conducted to aid terrorism.

Related Articles

Ukraine's central bank cuts key policy rate to 12.5%

The National Bank of Ukraine (NBU) will cut its key policy rate by 0.5 percentage points to 12.5% per annum from May 26. The move is consistent with the pursuit of inflation ... more

RBI doubles net profit y/y in Q1 as Russian business recovers

Raiffeisen Bank International (RBI), the second largest bank operating across Central and Eastern Europe by assets, reported that net profit almost doubled year-on-year to €220mn in the first ... more

World Bank forecasts a 0.4% y/y decline in Belarus's GDP for 2017

The Belarusian economy will decline by 0.4% year-on-year in 2017, followed by a modest growth of 0.7% in 2018 and 1.2% in 2019, the World Bank forecasts in its Belarus Economic Update published on ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Dismiss