The International Monetary Fund has predicted that the economies of the Middle East and North Africa will experience a recovery and a growth of 7% next year, while this year they will face a decline of 2% due to disruptions caused by the war and the closure of the Strait of Hormuz.
Iran's Economic Situation Compared to Neighbors
According to the new report from this institution, Iran's economy will shrink by 7.6% this year compared to last year, and next year it will only grow by 3.6%; a growth that is by no means sufficient to compensate for this year's decline. In contrast, the economies of Iraq, Kuwait, and Qatar, whose oil and liquefied gas exports are highly dependent on the Strait of Hormuz, are expected to shrink by about 16% this year, but are projected to grow between 17% and 19% next year.
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The Impact of War on Trade and Energy Exports
The Islamic Republic disrupted foreign trade and energy exports of regional countries in the early months of the war by creating disturbances in the Strait of Hormuz. However, new reports indicate that oil production of OPEC member countries, excluding Iran, has nearly returned to pre-war levels last month. Data from the tanker tracking company, TankerTrackers, also shows that oil exports from regional countries have reached pre-war levels this month.
Iran's daily oil production has fallen by 40% compared to the pre-war period, dropping below two million barrels, and Iran's oil exports have been halted since mid-July due to the U.S. maritime blockade.
Inflation Rate and Iran's Economic Future
The International Monetary Fund has also predicted that Iran's annual inflation rate will peak at around 79% this year and will reach 42% next year. A decrease in the inflation rate does not mean that goods and services will become cheaper, but rather indicates that the rate of price increases is slowing down; meaning that the general price level will still rise, but at a slower pace than this year.
According to this prediction, Iran will have the highest inflation rate in the world this year after Venezuela. The Arab countries of the Persian Gulf and Oman are expected to have inflation rates of less than 5% this year, and even in Saudi Arabia and Kuwait, the inflation rate will be lower than last year's level.
Ultimately, the International Monetary Fund's report indicates that the global economy will grow by 3.1% this year, and the global inflation rate will reach 4.7%.
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