The World Bank forecasts slower growth for the Iranian economy

The World Bank has forecast that the Islamic Republic’s GDP growth will fall below 2 percent in 2024 and stand on the brink of recession as the rial falls and inflation rages.

In his latest Global Economic Outlook Report The World Bank, released on Tuesday, also said global growth is slowing sharply amid increased inflation, higher interest rates, lower investment and disruption caused by Russia’s invasion of Ukraine.

It said it expects global GDP growth of 1.7% in 2023, one of the slowest paces since 1993 barring the 2009 and 2020 recessions global growth of 3.0% forecast. The global economy is expected to grow by 2.7% in 2024.

Iran’s GDP prospects are given as 2.9% in 2022, but it will decrease to 2.2% in 2023 and 1.9% in 2024. The figures for Iran seem overly optimistic given the current annual inflation rate of 50 percent and a currency that has fallen 30 percent since September.

Unlike Iran, for example, most countries in the emerging and developing world category, including Brazil, Mexico, Argentina, Saudi Arabia, India, Pakistan and South Africa, reported negative GDPs in 2020, raising questions about the validity of the numbers to Iran, whose currency has fallen more than 10-fold since 2018 and tens of millions of middle-class citizens are now considered poor.

The 2024 outlook for Saudi Arabia, whose consumer prices rose 2.9 percent year-on-year in November, is forecast at 2.3 percent, while Iran has faced inflation of 40 to 50 percent over the past 24 months Food inflation exceeded 70 percent in 12 provinces, GDP growth of 1.9 percent is forecast. The answer most likely lies in the lack of transparency and likely data falsification by the regime’s authorities.

In recent years, the Islamic Republic has officially stopped providing raw data to the public. Every once in a while officials release some numbers that often don’t match or contradict available facts. In addition, the country is so isolated in the international community that the World Bank has to rely primarily on government data for its estimates.

The Iranian government, which has lost most of its vital oil revenues due to US sanctions, has resorted to money printing, with liquidity and the money supply increasing exponentially, which in turn drives up inflation and lowers the exchange rate of the local currency . Even pro-government Iranian politicians and lawmakers say the The economic situation is catastrophic and no growth is expected.

According to the World Bank, the bleak outlook will be particularly grim for emerging and developing economies as they grapple with high debt burdens, weak currencies and income growth and slowing corporate investment, which is now forecast at a compound annual growth rate of 3.5% over the next two years — less than half as fast as in the last two decades.

World Bank Group President David Malpass said: “The development crisis is deepening as global growth prospects deteriorate,” adding: “Emerging and developing economies face a multi-year streak of slow growth characterized by heavy debt burdens and weak investment as a global Driven by capital, it is being absorbed by advanced economies confronted with extremely high levels of public debt and rising interest rates.”

“Given the fragile economic conditions, any new adverse developments – such as higher-than-expected inflation, abrupt rate hikes to contain it, a resurgence of the COVID-19 pandemic or escalating geopolitical tensions – could lurch the global economy into recession,” the bank said in a statement accompanying the report.

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