Iran economy could rebound to 4.4% growth if US sanctions lifted: IIF

Iran economy could rebound to 4.4% growth if US sanctions lifted: IIF
Iran’s rial currency has lost about 50% of its value against the US dollar in 2020. (File/AFP)
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Updated 26 November 2020

Iran economy could rebound to 4.4% growth if US sanctions lifted: IIF

Iran economy could rebound to 4.4% growth if US sanctions lifted: IIF
  • Biden’s victory in the Nov. 3 US election has raised chances that the United States could rejoin a deal Iran reached with world powers in 2015
  • Trump abandoned the nuclear deal in 2018, and Tehran responded by scaling down its compliance

DUBAI: Iran’s economy could grow 4.4% next year if US President-elect Joe Biden lifts sanctions that have contributed to a deep three-year recession, although the COVID-19 crisis could limit foreign investment, the Institute of International Finance (IIF) said.
Biden’s victory in the Nov. 3 US election has raised chances that the United States could rejoin a deal Iran reached with world powers in 2015, under which sanctions were lifted in return for curbs on Iran’s nuclear program.
This is unlikely to happen overnight, however, and the prospects remain uncertain as the adversaries would both want additional commitments.
Iran’s rial currency has lost about 50% of its value against the US dollar in 2020, reflecting economic damage from sanctions and the coronavirus pandemic, although it strengthened in late October in anticipation Biden would unseat US President Donald Trump.
Iran has the highest COVID-19 death toll in the Middle East.
Trump abandoned the nuclear deal in 2018, and Tehran responded by scaling down its compliance.
The IIF, a trade body for the global financial industry, said that if United States lifted most of the economic sanctions on Iran by the end of 2021, the economy could expand 4.4% next year after an expected 6.1% contraction in 2020.
It would then grow by 6.9% in 2022 and 6% in 2023, the IIF said, adding that if oil exports increase, Iran could see its foreign reserves rise to $109.4 billion by the end of 2023.
Tehran has spoken optimistically about the return of foreign companies under a new US administration, but lack of financial transparency could still curb interest from firms who had made tentative moves to invest after the 2015 deal was struck.
Garbis Iradian, IIF’s chief economist for the MENA region, told Reuters foreign direct investment inflows would increase progressively from this year’s $890 million to over $6.4 billion in 2025.
Assuming most sanctions could be lifted by late next year, FDI is likely to remain below $2 billion in 2021, with most of the money coming from China, Iradian said, adding: “Moreover, the coronavirus pandemic will limit FDI inflows in 2021.”
The Iranian economy would remain fragile, though “not to the brink of collapse” if most of the sanctions remain in place, the IIF said.
Under such a “pessimistic” scenario, Iran would post 1.8% growth next year and its foreign reserves would steadily decrease from about $80 billion this year to $46.9 billion by the end of 2023.
About 90% of Iran’s official reserves are frozen abroad due to US sanctions.


Goldman Sachs nudges U.S. growth forecast higher on Biden stimulus plan

Goldman Sachs nudges U.S. growth forecast higher on Biden stimulus plan
Updated 17 January 2021

Goldman Sachs nudges U.S. growth forecast higher on Biden stimulus plan

Goldman Sachs nudges U.S. growth forecast higher on Biden stimulus plan
  • The bank expects economic growth of 6.6% in 2021
  • Biden outlined a $1.9 trillion stimulus package proposal on Thursday

Analysts at Goldman Sachs Group raised their U.S. growth forecast for the second time this month on expectations that President-elect Joe Biden’s fiscal stimulus plan will hasten the economy’s recovery from the COVID-19 pandemic.
The bank expects economic growth of 6.6% in 2021, compared with a previous forecast of 6.4%, according to a report published on Saturday. It also raised forecasts for how much stimulus the new administration will be able to push through in the near-term, to $1.1 trillion from $750 billion.
Biden outlined a $1.9 trillion stimulus package proposal on Thursday, saying bold investment was needed to jump-start the economy and accelerate the distribution of vaccines to bring the coronavirus under control.
“Larger boosts to disposable income and government spending imply stronger growth later in the year,” the bank’s analysts wrote.