Iran’s gross domestic product (GDP) officially contracted 3.5% y/y during the first quarter of the 2020/2021 Persian calendar year (March 20 to June 20), according to the Statistical Centre of Iran (SCI). A double whammy of inflationary pressure exerted on the economy by the impact of heavy US sanctions and a severe coronavirus (COVID-19) outbreak wreaked havoc on the already struggling economy.
Iran is planning to rely on foreign coronavirus vaccines while also developing its own, President Hassan Rouhani said on November 23 as new daily cases hit another record high in the country. On available figures, Iran is enduring the worst coronavirus outbreak in the Middle East, opting instead to only publish the number of people showing COVID-19 symptoms, even though people displaying no symptoms can spread the virus. Iran on November 25 reported a near-record daily death toll of 469, pushing the overall official toll to 46,207. New cases stood at a record 13,843 cases, bringing the total to 894,385.
Iranian MPs on December 1 voted in favour of a draft bill requiring the government to pursue uranium enrichment of 20% and not comply with other restraints placed on Iran’s nuclear development programme by the 2015 nuclear deal with major powers.Iran has lately gradually moved its enrichment up to around 4.5%. That is above the nuclear deal’s 3.67% cap but below the 20% Iran has achieved before. The breach is one of several made by Iran in protest at the US withdrawal in 2018 from the nuclear accord that protected its economy from major sanctions and the failure of Europe to take meaningful action to defend the Iranian economy from sanctions introduced by US President Donald Trump after he unilaterally pulled Washington out of the agreement.
US President-elect Joe Biden has reiterated that his administration will lift sanctions on Iran if Tehran returns to “strict compliance with the nuclear deal”. One obstacle to Biden taking the US back into the deal might be an insistence from Tehran that it is compensated for the economic damage wrought by the Trump sanctions.
On December 1, the Guardian reported some of Europe’s leading diplomats as saying that France, Germany and the UK must move quickly to set out a roadmap for Iran and the incoming Biden administration to come back into compliance with the nuclear deal. The remaining signatories to the nuclear deal—France, Germany, the UK, Russia, Iran and China—are to meet at joint commission level in Vienna on December 16 to discuss how to keep the deal alive.
Meanwhile, Germany’s Bundesbank reportedly kept a multi-billion-euro deposit facility open for Iranian banks, including two that faced fresh US sanctions, giving Tehran a much-needed banking lifeline at a time its access to the global financial system was largely cut off by tightened US sanctions. The US on October 8 hit 18 Iranian banks with new sanctions as it stepped up its “maximum pressure” campaign on Tehran.
A 5.5% drop in the TEDPIX on the Tehran Stock Exchange saw the benchmark index drop 69,000 points to 1.22mn to November 13. Considering the index for the first time made it past the 2mn-point threshold in early August, the bursting of the bubble and descent have been dizzying for investors, especially retail investors who faced with a collapsing Iranian rial (IRR) and other rotten investment prospects caused by heavy US sanctions turned to the bourse in the hope that decent returns were on offer
Iran’s economy could expand by as much as 4.4% in 2021 if US President-elect Joe Biden lifts sanctions that have contributed to a deep three-year recession, the Institute of International Finance (IIF) trade body said on November 26, Reuters reported. The coronavirus (COVID-19) crisis could, however, limit foreign investment even if it is green-lighted by Washington, it added.
Iran’s rial currency has lost another 50% of its value against the US dollar in 2020 to date, reflecting economic damage from the sanctions and the coronavirus pandemic.
The IIF said that if the US lifted most of the economic sanctions on Iran by the end of 2021, the Iranian economy could expand 4.4% next year following an expected 6.1% contraction in 2020.
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