World Bank forecast for the future of Iran’s economy

  • December 2, 2021

The latest World Bank report on the state of Iran’s economy shows that Iran’s economy will emerge from the two-year recession in the second half of 2021. In this article, we will talk about the World Bank and the future of Iran.

World Bank and future of Iran

According to Tejarat News, the World Bank, emphasizing the recovery of the Iranian economy from the two-year recession, identified six challenges facing the Iranian economy: “severe inflation”, “corona situation”, “unemployment”, “uncertain future state of sanctions”, “drought and energy disruption”. For Industry “and” Recent Tensions in Afghanistan. ” Given these challenges, the future of economic growth from the perspective of the World Bank is moderate and this growth is around 3%.

The latest report of the World Bank on the state of Iran’s economy shows that our country’s economy has been able to get out of the two-year economic recession with the help of measures to reduce the Covid-19 virus and a gradual increase in oil production in the second half of 2020. However, weak economic activity, in part due to US economic sanctions against the Iranian economy, declining oil revenues, and repeated costs associated with the Covid-19 virus, has widened the fiscal deficit in the Iranian economy and increased Inflationary pressures and the devaluation of the currency have led to very significant.

The World Bank has forecast a moderate outlook for Iran’s economic growth, which will be affected by challenges such as the next wave of Covid-19, uncertainty over the lifting of economic sanctions, recent tensions in Afghanistan, and climate change.

Prospects for the future of the economy

Expectations about the epidemic trend, improved demand from export partners, and geopolitical developments shape the outlook for the Iranian economy.

Iran’s average annual GDP growth is expected to remain below 3% in the medium term. Internally, slow security in the face of delta and coronary shutdowns, along with low investment rates, are key drivers of Iran’s economic outlook.

The impact of new strains of Coronavirus on global demand is expected to have a negative impact on Iran’s oil and non-oil exports, coupled with ongoing US export sanctions. On the other hand, disrupting trade with neighbors such as Afghanistan following the fall of the government in that country could weaken exports and further reduce access to foreign currency.

In addition, increasing climate challenges leading to water and energy shortages, along with high inflation, can increase pressure on vulnerable classes and increase social discontent. Possible positive developments for the Iranian economy also include the lifting of economic sanctions, which could lead to an increase in economic activity; Especially after years of operating below its potential.

In the absence of a return to oil revenues in the medium term, Iran’s new government will face significant financial shortages. It seems that despite the limited growth of non-oil revenues, the uncertain outlook for rising oil revenues, rising wages, and retirement costs, Iran’s financial balance remains in deficit. On the other hand, the government is expected to continue issuing bonds and selling public assets to finance the deficit. More bond issuance in the short term increases the risks of debt transfer, and the sale of assets will increase inflationary pressures.

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