Publication: Iran Economic Monitor, Spring 2024: Sustaining Growth Amid Rising Geopolitical Tensions
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2024-07-12
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2024-07-12
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The Iran Economic Monitor (IEM) provides an update on key economic developments and policies. It examines these economic developments and policies in a longer-term and global context and assesses their implications for the outlook for the country. The IEM’s coverage ranges from the macro-economy to financial markets to indicators of human welfare and development. It is intended for a wide audience, including policy makers, business leaders, financial market participants, and the community of analysts and professionals engaged on Iran.
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“World Bank. 2024. Iran Economic Monitor, Spring 2024: Sustaining Growth Amid Rising Geopolitical Tensions. © World Bank. http://hdl.handle.net/10986/41861 License: CC BY-NC 3.0 IGO.”
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Publication Iran Economic Monitor, Spring 2020(World Bank, Washington, DC, 2020-06-21)The recession in Iran accelerated in 2019-20 as United States (U.S.) sanctions further tightened. Inflation has gradually declined as the impact of the sharp depreciation of the rial in 2018-19 dissipated but foreign exchange reserves remain limited. The growing gross borrowing needs has increased the government’s reliance on debt issuance and withdrawals from strategic reserves. Negative economic growth and high inflation coupled with COVID-19 (Coronavirus) will put further pressure on household livelihoods in 2020-21. The current unique situation of Iran’s economy presents significant downside risks for the baseline macroeconomic outlook. The country’s economic and social challenges disproportionately impact the lower income decile households who have faced significant economic pressure. Any increase in the value of cash transfers, along with introducing targeting mechanisms, can help the poor cope with the social-economic shocks, but fiscal constraints may limit the scope for significant response.Publication Iran Economic Monitor, Spring 2021(World Bank, Washington, DC, 2021-05)Iran’s economy witnessed a modest recovery in the second half of 2020 following more than two years of economic recession. Restricted access to foreign exchange reserves and limited other external financing sources translated to pressures on the exchange rate and higher inflation in 2020-2021. The Coronavirus (COVID-19) pandemic further intensified economic pressures on the most vulnerable. Iran’s economic outlook hinges on the evolution of the Coronavirus (COVID-19) pandemic, the pace of global economic recovery, and the possibility of easing of US sanctions. The economy is at a crossroads and urgently needs a recovery plan of comprehensive and coordinated macro-fiscal reforms. Growth-enhancing reforms such as investment in green infrastructure, digital economy, and renewable energy can help lead the economy out of the pandemic and create much needed jobs.Publication Iran Economic Monitor, Spring 2022(Washington, DC, 2022-04)This Iran Economic Monitor (IEM) provides an update on key economic developments and policies as of Spring 2022. Iran’s economy continued its gradual recovery in 2021-2022 following the rebound in domestic and external demand. Despite a more accommodative fiscal policy in 2021-2022, higher oil and tax revenues have improved the fiscal deficit-to-GDP ratio. GDP growth is projected to remain modest in the medium term, as the economy remains constrained by both global and domestic gr owth bottlenecks. A more favorable global oil market outlook is projected to improve Iran’s fiscal and external balances. Iran’s economic outlook is subject to significant risks. Consumer price inflation accelerated due to a combination of supply-push and demandpull factors, adding to pressures on the welfare of lower-income households. Addressing long-term development challenges, including impending climate change shocks, requires a comprehensive package of economic reforms complemented by adequate social protection measures.Publication Iran Economic Monitor, Spring 2017(Washington, DC, 2017-06-30)The Iran Economic Monitor provides an update on key economic developments and policies over the past six months. It examines these economic developments and policies in a longer-term and global context, and assesses their implications for the outlook for the country. Its coverage has ranged from the macroeconomy to financial markets to indicators of human welfare and development. It is intended for a wide audience, including policy makers, business leaders, financial market participants, and the community of analysts and professionals engaged in Iran.Publication Iran Economic Monitor, Spring/Summer 2023(Washington, DC: World Bank, 2023-08-22)The Iran Economic Monitor (IEM) provides an update on key economic developments and policies. It examines these economic developments and policies in a longer-term and global context and assesses their implications for the outlook for thecountry. The IEM’s coverage ranges from the macroeconomy to financial markets to indicators of human welfare and development. Iran’s economy continued to grow moderately for the third consecutive year in 2022/23, albeit at a slower pace than in the previous year. Real gross domestic product (GDP) grew by 3.8 percent in 2022/23, driven by expansions in services and manufacturing. Despite sanctions, the oil sector also expanded, aided by the tighter global oil markets. Favorable weather conditions helped the agriculture sector to marginally grow after the contractionsin previous years. On the expenditure side, private consumption was the main driver of GDP growth. Government consumption contracted to contain the budget deficit following a sharp expansionary policy in 2021/22. Meanwhile, exports and importsboth increased, and strong investment in machinery drove investments up, while construction investment marginally improved. However, the economy continuesto face growth constraints notably related to the economic sanctions, restricted access to external markets and to the latest technology, and much needed foreign investment. The Special Focus of the report highlights the scarring effects of the COVID-19 pandemic, documenting the marked deterioration in labor market outcomes. Despite sizeable government interventions to sustain the economy, in the first year of the pandemic (2021/22), approximately 1 million Jobs were lost, and labor force participation contracted by 3 percentage points. Iranian women were the most affected: two out of three jobs lost between 2019/20 and 2020/21 were previously held by women. The gendered impact of the crisis contributed to widening Iranian’s women disadvantage in the labor market. Most importantly, the gains in femalelabor force participation slowly accumulated since 2011 vanished. Consistent with what is observed in other countries, women with young children were the most affected by the crisis. The combined effect of school closures and unequal intra-household allocation of care responsibilities, associated with prevailing gender norms, pushed Iranian women with children out of the labor force. Whether or not these trends will be reversed as the management of the COVID-19 pandemic is normalized and the economy recovers from the crisis remains an important policy question.
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