US sanctions on Iran, rising unrest in the Middle East and North Africa and oil price volatility are dragging down regional economic growth, the International Monetary Fund (IMF) said Monday (April 29th).
The IMF warned in a bi-annual economic outlook report that prospects for the region are "clouded by elevated levels of uncertainty", AFP reported.
"Such uncertainty may increase investors' perception of risk for the whole region, leading to capital outflows and exchange rate pressure," the IMF said.
The IMF forecasts the economy in Iran, the second largest in the region behind Saudi Arabia, will shrink by 6% this year after contracting by 3.9% in 2018.
IMF Middle East and Central Asia director Jihad Azour said the projection was made before the US tightened measures targeting Iran's oil industry last week.
Azour said sanctions have already pushed inflation in Iran to around 50%
Overall regional economic growth was expected to remain subdued at 1.3% this year from 1.4% in 2018.
For oil exporters growth was down at 0.4% for 2019, while importing countries were expected to increase at 3.6% this year, from 4.2% in 2018.
Gulf Co-operation Council (GCC) countries -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE -- were forecast to slightly buck the trend, improving to 2.1% growth from 2% in 2018.
The IMF said economic growth in the broader region was negatively impacted by rising conflict, corruption, slow reforms, high levels of debt and continued oil price fluctuations.