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IMF: Iran Inflation Could Reach 40 Percent Amid Sanctions

The IMF estimates that the economy in Iran contracted by 3.9 percent in 2018. (file photo)

Iran's economy is expected to shrink by six percent this year and inflation could reach 40 percent, the International Monetary Fund (IMF) forecasts, as the country copes with the impact of tighter U.S. sanctions.

Washington reimposed sanctions on Iran's oil exports in November following the U.S. withdrawal from a 2015 nuclear accord.

On April 21, the White House said it had decided not to renew exemptions from U.S. sanctions to buyers of Iranian oil in an effort to cut Iran's vital oil exports to zero.

Jihad Azour, IMF Middle East and Central Asia director, said on April 29 that the projection preceded the latest elimination of waivers -- meaning the situation could get even worse.

"Clearly the re-imposition of sanctions and the removal of the waivers will have additional negative impact on the Iranian economy both in terms of growth and in terms of inflation, where inflation could reach 40 percent or even more this year," Azour said.

Azour was quoted by the AFP news agency as saying that sanctions have already pushed inflation in Iran to around 50 percent.

Earlier this month, a U.S. official said that U.S. sanctions have denied Tehran more than $10 billion in oil revenue.

The IMF estimates that the economy in Iran, the second largest in the region behind Saudi Arabia, contracted by 3.9 percent in 2018.

Iran signed a landmark nuclear deal in 2015 with world powers, including the United States -- receiving relief from international sanctions in return for curbing its nuclear program and ensuring it was not trying to produce nuclear weapons.

But the United States withdrew from the agreement, with U.S. President Donald Trump saying the Iran nuclear deal was "fatally flawed" because it did not address Iran's ballistic-missile program or Tehran’s alleged state sponsorship of terrorism.

Based on reporting by AFP and Reuters