US sanctions on Iran, rising unrest in the Middle East and North Africa and oil price volatility are dragging regional economic growth, the International Monetary Fund said Monday.
The IMF warned in a bi-annual economic outlook report that prospects for the region are “clouded by elevated levels of uncertainty.”
“Such uncertainty may increase investors’ perception of risk for the whole region, leading to capital outflows and exchange rate pressure,” the global lender said.
The IMF forecasts the economy in Iran, the second largest in the region behind Saudi Arabia, will shrink by 6.0 percent this year after contracting by 3.9 percent in 2018.
Overall regional economic growth was expected to remain subdued at 1.3 percent this year from 1.4 percent in 2018.
For oil exporters growth was down at 0.4 percent for 2019, while importing countries were expected to increase at 3.6 percent this year, from 4.2 percent 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.