Uncertainty dampening economic sentiment in Iran: IMF

The Dollar Business Bureau

Ever since Trump called the landmark Iran nuclear deal a 'disastrous' one and threatened to dismantle it, there has been a lot of uncertainty regarding Iran's economic future. Amid speculations of US re-imposing sanctions on Iran, IMF said that renewed ambiguity on US's policy towards Iran is undermining economic sentiment.

The annual report released by IMF on Iran's economy paints a grim picture for investment and growth in the country. It stated that Iran could even slip into recession if the agreement negotiated by Obama in 2015 fell apart. This deal essentially gave life to Iran's frail economy last year, by lifting many financial and trade sanctions. In exchange, Iran consented to strict scrutiny and monitoring of its nuclear operations by International Atomic Energy Agency (IAEA).

Iran's test-firing of a ballistic missile in January invoked sanctions from USA on individuals and firms, which lent support to the missile program. Trump administration has 'put Iran on notice' and warned that 'nothing is off the table' if Iran further engages in provocative actions. The détente so delicately preserved between the two countries for more than a year has lapsed due to eruption of heated tensions after inauguration of Trump.

Trump's explicit intolerance towards Iran's expansionist strategy for its missiles program extinguishes any possibility of rapprochement in the near future. USA contends that the recent missile tests held by Iran were in violation of a UN Security Council Regulation which outlaws launch of missiles capable of carrying nuclear weapons.

While Iran has defended its program with a counter-argument that absolves it of any violation, USA is not the one to be lead by the nose. IMF, in its assessment, also mentioned that Iran's growth is likely to rebound to 6.6% in 2016-17 due to higher oil production. Forecasts of growth rate dropping to 3.3% next year make for an abysmal future outlook of the economy.

"The uncertainty surrounding the nuclear agreement and especially relations with the US, could deter investment and trade with Iran and short-circuit the anticipated recovery," the report warned of the danger in financially isolating Iran.