Following an IMF consultation mission to
It indicated that inflation and unemployment are high, while the corporate and banking sectors show "signs of weakness," where these shocks have "exposed structural weaknesses in the economy and in the policy framework." "
It said that the new authorities "should embark on a prompt and vigorous implementation of fundamental reforms to the frameworks supporting product, labor, and credit markets." It added that these reforms would "lay the basis for sustained high growth and lower unemployment, especially if the external environment continues to improve." The Fund indicated that the new authorities "are well aware of these challenges and the need to advance reforms, and have begun the preparatory work in many of these areas." According to the IMF, 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
It noted that 12-month inflation has dropped "rapidly" from about 45 percent in
This drop reflects "tighter" CBI (
It added that "prospects for 2014/15 have improved with the interim P5+1 agreement but still remain highly uncertain." Under the current external environment, IMF 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.
"Comprehensive reforms are needed to address many complex challenges," the Fund stressed.
The IMF team, led by
They exchanged views with senior officials of the
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