World Bank: Iran Likely to Suffer Worse Recession Than Previously Thought
June 05, 2019 7:40 PM
By: Michael Lipin
WASHINGTON —The World Bank says Iran is likely to experience an even worse recession this year than previously thought, as U.S. sanctions largely choke off oil exports that have been Tehran’s main revenue source.
In its latest Global Economic Prospects report published Wednesday, the Washington-based institution that provides loans to countries said it expects Iran’s Gross Domestic Product to shrink by 4.5% this year, a steeper contraction than its earlier estimate of negative 3.6% GDP growth for 2019.
“The oil industry is an important part of Iran’s economy, and its oil production is clearly going to drop because of the new U.S. sanctions,” said Patrick Clawson, research director for the Washington Institute for Near East Policy, in a VOA Persian interview on Wednesday.
The Trump administration imposed a total, unilateral ban on Iranian oil exports on May 2 as part of its campaign of “maximum pressure” on Iran to negotiate an end to its perceived malign behaviors. It had issued sanctions waivers to eight of Iran’s oil customers in November to allow them to keep importing Iranian crude for six months, but later said it would not renew those waivers and would require those customers to reduce such imports to zero.
U.S. economist Steve Hanke of Johns Hopkins University in Baltimore told VOA Persian in another Wednesday interview that Iran’s internal economic problems also are to blame for its worsening recession. “Iran is very corrupt, has very little economic freedom, and it’s hard to start a business there because Iran is not really a free market or liberal economy,” Hanke said.
Transparency International, a Berlin-based civil society organization that monitors global corruption, has ranked Iran 138 out of 180 countries in its Corruption Perceptions Index.
Iran’s other low global economic rankings include 155 out of 180 nations in the Economic Freedom Index of the Washington-based Heritage Foundation, a conservative public policy institute, and 128 out of 190 governments in the World Bank’s Ease of Doing Business index.
The World Bank’s new report also said Iran’s year-on-year inflation rate has risen sharply from about 10% in the middle of last year to about 52% in April. It said the depreciation of Iran’s rial since May 2018, when the U.S. announced it would re-impose sanctions on Iran, has contributed to the rising inflation. The rial’s slump versus the dollar in Iran’s unofficial currency market has made dollar-denominated imports more expensive for Iranians.
Clawson said Iran’s inflation is high primarily because it is relying on printing money to finance its spending. “The Iranian government is not bringing in enough revenue to pay for its expenses, so it is borrowing money from the banking system to cover the difference, and that is driving inflation,” he said.
Hanke, who says he is the only economist outside Iran to measure its inflation with high frequency, told VOA Persian that he calculated Iran’s actual inflation rate to be 113% on Wednesday, much higher than the World Bank’s latest reading.
The World Bank’s projection of a 4.5% contraction in Iran’s GDP this year is not as bad as the 6% contraction predicted by the International Monetary Fund, another global lending agency, in its latest report from April. The World Bank also said it expects economic growth in Iran to return next year “as the impact of U.S. sanctions tapers off and as inflation stabilizes.” It projected a 0.9% rise in Iran’s GDP for 2020.
Hanke declined to make his own predictions for Iran’s economic performance, saying any forecasts for a nation such as Iran are problematic because they rely on guesswork.
This article originated in VOA’s Persian Service.
On behalf of the Kurdish American Committee for Democracy in Iran, I congratulate the board of advisers, board of directors, members, and the supporters of the KNCNA on the 20th anniversary of excellent work for the promotion of the Kurdish issues in the North America. I hope that the 20th conference will be able to successfully reach its goals as it has always done.
Summary of Activities:
Since the last conference the committee, Establishing contact with different Kurdish opposition groups within Iran as well as in Diaspora.
– Communicated with the Eastern Kurdistan representatives in the US who have been involved in debates on the committees’ activities within the US.
– Formed contact with the representatives of the Non-Kurdish Iranian oppositional organizations in the US regarding a common goal against Iranian regime.
– One major goal of the committee from the beginning has been creating a unified Kurdish front, and later to establish a united oppositional front by bringing other minority groups together. We have taken major strides towards this goal.
– Unfortunately, the Iranian Kurdish organizations are on the merge of dissociating into separate groups, and no real unity is present at this moment, which seems to be the influence of the Iranian intelligence groups affecting the psychological and political problems within those organizations. We are considering that an intervention should takes place immediately before these organizations are spread apart even further and lose sight of unity.
As an organization from outside of the turmoil, we feel that we should intervene as pathologists to identify the issues that are fracturing these organizations.
– Talks at universities and other venues have been held on the issue of Kurdish political and human rights.
– Press releases as well as critical reviews of the events that somehow affect the Kurdish people in Iran have been published on a consistent basis and distributed among a vast network of concerned media.
– Acted as the lead expert consultants on Kurdish and Iranian issues for Radio news broadcasts and news websites.
– Directly and indirectly participated in various rallies and demonstrations to voice the Kurdish peoples’ cause and issues in Los Angeles and other major US cities.
– Began establishing contact inside Iran with the human rights activists and Kurdish human rights organizations.
– Researching and collecting an extensive archive of information regarding the work and activities that have taken place in Kurdistan of Iran within the past 3 decades.
Recommendation and request:
Due to the extensive archive we have collected, the connections we have made, the networking we have created to communicate with the media, as well as, because we are a specialized expert group, I request that KNCNA as well as all of our affiliates support this committee financially and professionally regarding issues of Iran.
One of the critical issues that the Kurds from Iran face within Iran as well as in diaspora is that we have been boycotted by the major media’s in the western hemisphere. However, this problem is not unique to the Kurdish minorities in Iran; it also affects the other ethnicity. It seems that the prominent mentalities of these medias are the establishment of a royal system or a republic in which there is no emphasis on the minority groups of Iran.
A statement that is important to keep in mind is that helping this committee and supporting it is a crucial aspect of a fight against injustice towards Kurds.
The new wave of violence that is taking place in Iran, which is targeting the Kurdish liberation activists is a threat not just to Kurds in Iran but also to Kurds in the rest of the world. One must realize that although this committee’s agenda is very specific and region orientated, its ultimate goal is broad and vast.
Iran as well as Turkey has both attacked the Kurds and now it is vital for the Kurds to form a unity and a Kurdish front to be able to retaliate against violent action. Any form of unity and support will be highly appreciated and can contribute greatly to the overall success of the Kurdish cause and to democracy as a whole.
Thank you so much for giving me the opportunity to give you a brief report on the activities of the Kurdish Committee for Democracy in Iran, and the Kurdish situation in Iranian Kurdistan.
Chair of Kurdish American Committee for Democracy and Human Rights in Iran/ KNCNA