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US sanctions to stop impacting Iran's economy next year: IMF expert

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Iranian traders work at Tehran Stock Exchange on July 1, 2019. (AFP photo)

An expert working for the International Monetary Fund (IMF) says a series of harsh sanctions imposed by the United States on Iran would stop impacting the country’s economy next year.

Jihad Azour, director of the IMF’s Middle East and Central Asia Department, told Reuters news agency on Monday that Iran would not experience any extra pressure from the US sanctions two years after they were re-imposed following Washington's withdrawal from an international agreement on Iran’s nuclear program.

“The estimate is that ... sanctions that were reintroduced last year and tightened this year, next year will not have an additional impact,” said Azour.

The comments come as many experts believe Iran has largely managed to offset the impacts of the US sanctions through a series of measures that has seen the country diversify its economy from oil.

The IMF has predicted that Iran would feel the highest degree of pain caused by the sanctions this year as the country’s economy would shrink by 9.5 percent.

However, estimates suggest that the Iran’s gross domestic product (GDP) would continue to grow at a flat rate next year, meaning that the US sanctions, some of them unprecedented in the history, would lose their function.

The World Bank issued a report earlier this month saying that Iran’s GDP would slightly increase in the next two years.

It said Iran’s economy would shrink by 8.7 percent in 2019/20 but insisted that the GDP would bounce back in the next two financial years with a slight growth of 0.5 percent annually.

Iranian government reports on major economic indicators, including on inflation and unemployment rate, also suggest that the economy is recovering from losses suffered in the summer of 2018 when the national currency dipped to historic lows of 190,000 against the US dollar.

The rial was trading at 113,500 against the dollar on Monday based on information provided by currency price monitoring websites and reports from Tehran’s unofficial exchange market.

All those came as US Treasury Secretary Steven Mnuchin insisted on Monday that sanctions imposed on Iran had are despite numerous assertions that Washington and allies have failed to reach their objectives from pressuring Iran economically.

“We have executed on a maximum pressure campaign for sanctions. They have worked, they are working, they are cutting off the money,” Mnuchin said while on a visit to the Israeli-occupied Palestinian territories.

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