Donald Trump’s sanctions against Iran have triggered a collapse in economic growth, pushing the Islamic republic into a deep recession and lifting inflation towards 40 per cent, according to the IMF.

The fund on Monday linked its forecast of a 6 per cent contraction in Iran this year with Mr Trump’s efforts to tighten an economic squeeze on the country. 

The economic slowdown is stoking popular discontent and heightening political tensions between reformists allied to President Hassan Rouhani and hardliners, who have long been staunchly opposed to dialogue with the US.

The US measures are set to cause increasing pain after the Trump administration said it would start to enforce sanctions on some of Iran’s biggest oil buyers, which had been given waivers to import its crude. Japan, South Korea, Turkey, India and China face mounting US pressure to stop importing Iranian oil.....

...It also warned that annual inflation in Iran could reach 37 per cent this year — one of the highest rates in the past two decades — and potentially rise further if oil exports continue to fall.

In the fund’s previous forecast in October it predicted that Iran’s economy would shrink 3.6 per cent this year.

A 6 per cent fall in gross domestic product would mark the economy’s worst performance since 2012, when the IMF said GDP dropped 7.7 per cent as the Obama administration’s sanctions tied to its nuclear activities began to bite.

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