Sanctions Push Iran into Recession - GDP Expected to Shrink by 3.5%

Institute for International Finance, the Washington-based global association of financial services, said today in its report on the Middle East and North Africa that economic sanctions imposed on Iran have pushed the country into recession. (Reuters, 10 December)

Crude oil exports have dropped sharply, the Iranian rial has plummeted and inflation has soared this year, with GDP expected to shrink by 3.5 percent in 2012/2013 Iranian fiscal year.

“With crude oil prices holding at around $110 per barrel, (Iranian) government revenues from oil (which accounted for about half of its total revenues in previous years) could drop by at least 40 percent,” the report said. (Reuters, 10 December)

IIF also forecast that inflation will average around 50 percent this year, up from 26.5 in 2011.

The IIF report notes that the worsening economic conditions could have serious political and social implications as Iran approaches mid-2013 presidential elections.