The World Bank has forecasted Iran’s gross domestic product (GDP) will grow by 5.8 percent in 2016 and by 6.7 percent in 2017.
In its January 2016 Global Economic Prospects report with the theme of Spillovers amid Weak Growth, the World Bank said Iran’s economy expanded by 1.9 percent in 2015.
It is while in its June 2015 report, the bank had predicted a 1 percent GDP growth for the country in 2015 and a 2 percent GDP growth in 2016.
The World Bank’s recent report says a removal of sanctions following the implementation of the Iran nuclear agreement could increase Iranian oil exports by 0.5-0.7 million barrels per day by 2016, nearing the pre-sanctions level of 4 percent of global consumption.
According to the report, growth In the Middle East and North Africa, despite low oil prices, is expected to accelerate to above 5 percent in 2016-18. The improvement is predicated on a strong recovery in the Islamic Republic of Iran, the region’s largest developing economy.
The agreement, the report says, stands to have positive spillover effects for Iran’s oil-importing neighboring countries, but might have negative effects on developing oil exporters in the region if additional oil production and exports put downward pressure on international oil prices.
Consequently, the outlook reflects slightly higher growth among other oil exporters, especially Iraq and Algeria, and a more modest medium-term improvement among oil importers, from 3.5 percent in 2015 to an average of 4 percent in 2016–18.
The World Bank also said Iran’s nuclear agreement opens the door for reintegration of the country into the global economy and the reinvigoration of its oil, natural gas, and automotive sectors. In this regard, renewed optimism about the potential of the Iranian economy has already generated a flurry of investment interest by foreign companies.
Although international sanctions on the Islamic Republic of Iran contributed to an episode of extremely high inflation in 2012 and 2013, inflation has moderated more recently, despite a depreciating rial.
Iranian policymakers have said they will make it a priority to reduce inflation, which may become an easier task as sanctions are loosened.