IMF: Iran Sanctions, Civil Unrest Causing Mideast Economic Instability
The International Monetary Fund warned in its latest biannual report that US sanctions on Iran, ongoing civil unrest in the Middle East and North Africa (MENA) and volatility in the oil markets were precluding economic growth – if not contributing to a downturn. The IMF also attributed the tumultuous economic situation in MENA countries to ongoing conflicts, corruption, slow rates of reform and high debt levels. The global lender noted that prospects for the region were “clouded by elevated levels of uncertainty…[that] may increase investors’ perception of risk…leading to capital outflows and exchange rate pressure.” The IMF forecasted that the Iranian economy, the second largest in the Middle East after Saudi Arabia’s, would shrink by 6.0 percent this year after contracting by nearly 4% in 2018. According to a senior IMF official, sanctions have already pushed inflation in the Islamic Republic to around 50%. Overall, the IMF expects regional economic growth to remain low, at 1.3% in 2019, down slightly from 1.4% last year. Notably, the economies of Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait, Oman and Qatar will likely buck the trend, improving to an average of 2.1% growth from 2.0% in 2018.