Panorama econòmic

Economic indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The reintroduction of sanctions by the U.S. government, coupled with the fall of oil prices, brought the Iranian economy into recession, and GDP shrank by 6.8% in 2019 amid declining consumption, oil exports and construction activity. The non-oil sectors generate most of Iran's economic output and jobs and have proven more resilient under U.S. sanctions than the energy sector. Despite the expansion of US sanctions to other key sectors, non-oil GDP grew by 1.1% in 2019/20 led by the agricultural and manufacturing sectors. In 2020, the Islamic Republic of Iran was hit hard by the COVID-19 pandemic. One of the first epicentres of the pandemic, Iran was hit hard because of its slow response, but also because of US sanctions, which led to shortages of medical equipment. Despite this, the Iranian economy grew by 3.4% in 2020 and 2.5% in 2021. According to the IMF's October 2021 forecast, growth is expected to stabilise in 2022 and 2023, estimated at 2% of GDP respectively. Iran’s economic outlook remains highly uncertain, especially given the COVID-19 evolution and the continuation of US sanctions by the current administration of US President Joe Biden.

The decline in revenues as a result of US sanctions has prompted the government of Iran to satisfy its financing needs through extensive debt issuance and the sale of assets on the stock market. The fiscal deficit-to-GDP ratio more than doubled to 3.7% in 2019/20 as oil revenues have halved and their share in budget revenues has fallen to an all-time low. Public debt decreased to 39.5% of GDP in 2020 and then 33.6% in 2021 from 47.9% in 2019. It is expected to stabilise at 33.3% in 2022 and 34.2% in 2022. In addition, the country's current account has reached a negative rate of -0.1% in 2020, due to US sanctions, before bouncing back to 1.3% in 2021. The IMF expects the current account to stabilise at 1% in 2022 and 2021. High inflation has placed further economic stress on low-income households as a result of a sharp depreciation of the currency. Iran's ability to counter exchange rate pressures has been hampered by limited reserves and limited access to foreign export earnings. The currency depreciation impacted on consumers as imported goods became more expensive and domestic production prices, especially for tradable goods, increased. Inflation increased to 36.4% in 2020 and 39.3% in 2021 up from 34.6% in 2019. It is expected to be contained at the high rate of 27.5% in 2022 and then 25% in 2023 according to the IMF's latest World Economic Outlook (April 2021).

Iran's unemployment rate decreased to 9.6% in 2020 despite the negative economic impact of the COVID-19 pandemic but came back to 10% in 2021. The IMF estimates that the rate will remain relatively stable in 2022 (10.5%) and in 2023 (10.8%). The number of people no longer actively seeking work is increasing. Years of recession and high inflation have severely challenged household livelihoods and halted poverty reduction trend. In 2018/19, the national poverty rate measured at the international poverty line of $5.5 at purchasing power parity (PPP) was 12.3%, up 1.5 percentage points from the previous year. Inequality (as measured by the Gini index) was 35.6 points and continued to rise after 2016/17. Higher living costs have undermined the value of cash transfers and labour income in real terms. Poverty mitigation measures, including cash transfers, have contributed to partially mitigating pressures on the poor and placed further pressure on fiscal budgets because of a failure to target appropriately. As the number of COVID-19 cases increased, the government applied stricter measures and announced new social transfers in autumn 2020. The economic shock of the COVID-19 pandemic has driven more households into poverty.  As a reaction, the authorities launched new rounds of cash transfers and consumer loans for the lowest income deciles and households with no permanent income source.

Limited non-oil revenue growth owing to a slow recovery, uncertain prospects for higher oil revenues, and higher wage bill and pensions expenditures are expected to keep the fiscal balance in deficit. The government is expected to continue to issue bonds and sell public assets to finance the deficit in 2022. Iran’s economic outlook is shaped by the expectations about the course of the pandemic, the recovery in demand from export partners, and geopolitical develpments (World Bank, 2022).

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