Iran’s economy contracted
by 4.9 percent in the 2018-2019 year ended in March, slipping further
into recession as diminishing oil exports due to the U.S. sanctions are
depriving the Islamic Republic of its economic lifeline—oil revenues.
The 4.9-percent contraction between March 2018 and March 2019, reported by
the Statistical Center of Iran cited by VOA, could worsen even further as the
U.S. removed all sanction waivers for Iranian oil buyers as of May 2.
After the U.S. ended all sanction waivers for Iran’s oil customers on May
2, Iran’s crude oil exports dropped
significantly in May this year compared to April and plunged by more
than 2 million bpd off their 2.5-million-bpd peak in April 2018, just before the
U.S. withdrew from the Iran nuclear deal and moved to re-impose sanctions on
Iran’s oil industry.
Iran is
considering revising its financial and budgetary policies to remove oil
income from them as a means to “counter Washington’s economic sanctions that
constitute a case of terrorism,” Iran’s Foreign Minister Mohammad Javad Zarif
said last week.
Oil income is an essential part of Iran’s state revenues and the plunging
crude exports are crippling
the economy.
According to the International Monetary Fund (IMF), Iran’s economy is
expected to shrink by 6
percent this year, while the annual inflation will spike to 37.2
percent. Related:
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A World Bank report from earlier this month showed
that Iran’s annual inflation had risen sharply from about 10 percent in the
middle of 2018 to about 52 percent in April 2019, “contributed by a
depreciation of the rial in the parallel market of more than two-fold
compared to levels prior to the announcement of U.S. sanctions in April
2018.”
The World Bank sees Iran’s gross domestic product (GDP) dropping by 4.5
percent this year after an estimated fall of 1.9 percent in 2018.
By Tsvetana Paraskova for Oilprice.com
