By Dalga Khatinoglu - Trend:
According to this report, a combination of shocks, associated with the implementation of the first phase of the subsidy reform, ambitious social-programs inadequately funded, and a marked deterioration in the external environment stemming from the intensification of trade and financial sanctions, have weakened the economy.
"Inflation and unemployment are high, while the corporate and banking sectors show signs of weakness. These shocks have exposed structural weaknesses in the economy and in the policy framework," IMF said.
The fund added that
The new authorities should embark on a prompt and vigorous implementation of fundamental reforms to the frameworks supporting product, labor and credit markets.
"These reforms would lay the basis for sustained high growth and lower unemployment, especially if the external environment continues to improve. The new authorities are well aware of these challenges and need to advance reforms, and begin the preparatory work in many of these areas".
IMF went on to say that "the pace of contraction in economic activity is slowing. The economy has continued to shrink in the first half of 2013/14 (the Iranian calendar and fiscal years run from
According to the report, prospects for 2014/15 have improved with the interim P5+1 agreement but still remain highly uncertain. Under the current external environment, staff projects economic activity to begin to stabilize in 2014/15, with real GDP growing by 1-2 percent in 2014/15. Inflation would potentially decline to 15-20 percent, excluding the impact of planned higher domestic energy prices.
The international body advised
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