BEIRUT: Sanctions imposed on Iran over its suspect nuclear program have pushed the country into recession, a global association of financial services said Monday. Crude oil exports have dropped sharply, the Iranian rial has plummeted and inflation has soared in 2012, the Washington-based Institute for International Finance said in its report on the Middle East and North Africa.
GDP in 2012 is expected to shrink by 3.5 percent, from 1.2 percent positive growth in 2011, it added.
The West suspects Iran is enriching uranium to levels that could be used in weapons and the U.S. Senate is considering a broader set of economic sanctions on Iran’s energy, port, shipping and shipbuilding sectors. Tehran says the program is for civilian purposes.
During the 2012-2013 fiscal year “with crude oil prices holding at around $110 per barrel, government revenues from oil [which accounted for about half of its total revenues in previous years] could drop by at least 40 percent,” it said.
The Iranian government has started consolidating public spending to offset a fall in revenues, it added.
The rial has been “steadily depreciating this year as foreign currency inflows have been garnered by the central bank for use in payment for government imports and to meet essential import needs,” it said.
Inflation will average around 50 percent this year, up from 26.5 in 2011.
Iranian officials at first sought to downplay the sanctions, but in recent months have acknowledged the impact, saying it must use the opportunity to end its dependence on oil.