IMF Forecasts Inflation at 7.2% in 2017

As per predictions made by the International Monetary Fund, the inflation rate in Iran will drop to 7.2% in 2017 from 7.4% in the current year. The forecast comes amid fears of an inflation surge that recently resurfaced in the wake of growth in the broad money supply.

 The IMF also predicts that the unemployment rate will dip slightly to reach 11.2% from 2016's 11.3%. This comes as unemployment in Iran had taken a turn for the worst in the current year, with joblessness reaching 11.3%, higher than the 10.8% last year.

In its latest report, the IMF also forecasts that Iran's current account balance that stood at 2.1% of GDP in 2015 will rise to 4.2% this year. However, in 2017 it will drop to 3.3% of the GDP.

According to IMF's World Economic Outlook for October 2016 published on its website, the Islamic Republic of Iran’s outlook has been boosted by higher oil production this year following the unwinding of sanctions. However, growth dividends are likely to materialize only gradually with reintegration into global financial markets and domestic reforms proceeding slowly.

In the Middle East, the recent modest recovery in oil prices is projected to have little impact on growth in oil-exporting countries. Most continue to tighten fiscal policy in response to structurally lower oil revenues, and financial sector liquidity continues to decline. Many countries in the region also remain affected by strife and conflict.

 The largest economy, Saudi Arabia, is projected to grow at a modest 1.2 % this year in the face of fiscal consolidation, before picking up to 2 % growth next year. Growth rates in most other countries of the [Persian] Gulf Cooperation Council are similarly projected to be held back by ongoing fiscal adjustment.

In Iraq, higher-than-expected oil production has pushed up the projected growth rate for 2016. Growth in 2017 and beyond is expected to be held back by continued security challenges and lower investment in the oil sector limiting gains in oil production.

Recent reforms and lower oil prices have helped improve macroeconomic stability in the oil-importing countries of the region. Yet growth remains fragile due to security concerns, social tensions, and lingering structural impediments. Continued reform, progress, less fiscal drag, and gradual improvements in external demand are expected to support the recovery.