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How incompetence, sanctions jointly hit Iran’s economy

Facing stagflation, the Iranian authorities must shift course and de-politicize economic decisions such as foreign exchange policy and management of the country's money supply.
A man looks at exchange rates seen through the window of a currency exchange shop in Tehran's business district, Iran, January 17, 2016. REUTERS/Raheb Homavandi/TIMA ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. FOR EDITORIAL USE ONLY.  - GF20000097685

There is an Iranian proverb that goes, “You can tell a good year from its spring.” Judging from the massive damage caused by the recent floods in Iran, one has to conclude that the new Iranian year (beginning March 21) will be a bad one for the economy. The economic consequence of the recent floods will include a minimum of $2.5 billion in direct damages and even more in indirect losses.

Even before the impacts could be measured, on April 9, the International Monetary Fund revised the growth forecast for Iran downward as part of the overall projections for the global economy in 2019. In the case of Iran, the previous forecast of 3.6% was revised with a projected 6% decline in the current year. The announcement by the Donald Trump administration that it won’t extend sanctions waivers for several countries that buy Iranian oil will make it more difficult for Iran to generate and repatriate its oil export revenues. 

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