A new report released by World Bank expects Iran’s economy to grow 3.7% in 2022.
“Output in the Islamic Republic of Iran is expected to grow by 3.7% in 2022, boosted by the waning of the pandemic and higher oil prices. Growth is expected to slow subsequently, however, as unresolved structural challenges and feeble fixed investment limit the country’s growth potential,” reads part of the group’s flagship World Economic Prospects report published for June.
Forecasts for 2023 and 2024 have been put at 2.7% and 2.3% respectively.
According to the World Bank, Iran’s GDP growth stood at -6.8%, 3.4% and 4.1% in 2019, 2020 and 2021 respectively.
“Just over two years after Covid-19 caused the deepest global recession since World War II, the world economy is again in danger. This time it is facing high inflation and slow growth at the same time. Even if a global recession is averted, the pain of stagflation could persist for several years, unless major supply increases are set in motion,” report said.
“Amid the war in Ukraine, surging inflation and rising interest rates, global economic growth is expected to slump in 2022. Several years of above-average inflation and below-average growth are now likely, with potentially destabilizing consequences for low- and middle-income economies. It’s a phenomenon — stagflation — that the world has not seen since the 1970s.”
The World Bank’s forecasts reflect a sizable downgrade to the outlook, as global growth is expected to slow sharply from 5.7% in 2021 to 2.9% this year, which also reflects a nearly one-third cut to its January 2022 forecast for this year of 4.1%.
It noted that the surge in energy and food prices, along with the supply and trade disruptions triggered by the war in Ukraine and the necessary interest rate normalization now underway, account for most of the downgrade.
“Covid-19 already dealt a major setback to income growth and poverty reduction in developing economies. The fallout from the war in Ukraine compounds the challenges for many of them. They are expected to grow 3.4% in 2022, barely half the rate in 2021 and well below the average from 2011 through 2019. Middle-income countries will see a sharp downgrade to growth in 2022, losing 1.3 percentage points relative to the January forecast,” the report said.
“Because of the adverse shocks of the past two years, real income per capita in 2023 will remain below pre-Covid-19 levels in about 40% of developing economies. For many countries, recession will be hard to avoid. With the supply of natural gas constrained, especially for use in fertilizer and electricity grids in poorer countries, announcements of major production increases worldwide will be essential for breaking out of stagflation and restoring noninflationary growth.”