Iran Economy to Shrink 9.5% this Year amid Tighter US Sanctions, Says IMF

File photo of Iranian women at the Tajrish bazaar in northern Tehran. (AFP)
File photo of Iranian women at the Tajrish bazaar in northern Tehran. (AFP)
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Iran Economy to Shrink 9.5% this Year amid Tighter US Sanctions, Says IMF

File photo of Iranian women at the Tajrish bazaar in northern Tehran. (AFP)
File photo of Iranian women at the Tajrish bazaar in northern Tehran. (AFP)

Iran’s economy is expected to shrink by 9.5% this year, the International Monetary Fund (IMF) said, down from a previous estimate of a 6% contraction, as the country feels the impact of tighter US sanctions.

The IMF forecasts, published on Tuesday in the fund’s World Economic Outlook report, are not far from estimates given last week by the World Bank, which said the Iranian economy by the end of the 2019/20 financial year would be 90% smaller than it was just two years ago.

Iran, a large oil producer, saw its oil revenues surge after a 2015 nuclear pact agreed with six major powers that ended a sanctions regime imposed three years earlier over its disputed nuclear program.

But new sanctions brought in after US President Donald Trump withdrew from that deal in 2018 are the most painful imposed by Washington, targeting nearly all sectors of Iran’s economy.

The IMF had previously forecast Iran’s economy to shrink by 6% this year, but that estimate preceded Washington’s decision in April to end six months of waivers which had allowed Iran’s eight biggest oil buyers to continue importing limited volumes.

The fund said Iran, along with other emerging market economies, continues to experience “very severe macroeconomic distress.”

A drop in the Iranian currency following the re-imposition of sanctions has disrupted Iran’s foreign trade and boosted annual inflation, which the IMF forecasts at 35.7% this year.

The Iranian rial official rate is set at 42,000 rials to the US dollar, but its market rate stood at around 115,000 against the dollar on Tuesday, according to foreign exchange website Bonbast.com.



Israeli Ultra-Orthodox Party Leaves Government over Conscription Bill

 Israel's Prime Minister Benjamin Netanyahu, surrounded by ministers from the government attends a session of the Knesset, Israel's parliament, in Jerusalem, Monday, July 14, 2025. (AP)
Israel's Prime Minister Benjamin Netanyahu, surrounded by ministers from the government attends a session of the Knesset, Israel's parliament, in Jerusalem, Monday, July 14, 2025. (AP)
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Israeli Ultra-Orthodox Party Leaves Government over Conscription Bill

 Israel's Prime Minister Benjamin Netanyahu, surrounded by ministers from the government attends a session of the Knesset, Israel's parliament, in Jerusalem, Monday, July 14, 2025. (AP)
Israel's Prime Minister Benjamin Netanyahu, surrounded by ministers from the government attends a session of the Knesset, Israel's parliament, in Jerusalem, Monday, July 14, 2025. (AP)

One of Israel's ultra-Orthodox parties, United Torah Judaism, said it was quitting Prime Minister Benjamin Netanyahu's ruling coalition due to a long-running dispute over failure to draft a bill to exempt yeshiva students from military service.

Six of the remaining seven members of UTJ, which is comprised of the Degel Hatorah and Agudat Yisrael factions, wrote letters of resignation. Yitzhak Goldknopf, chairman of UTJ, had resigned a month ago.

That would leave Netanyahu with a razor thin majority of 61 seats in the 120 seat Knesset, or parliament.

It was not clear whether Shas, another ultra-Orthodox party, would follow suit.

Degel Hatorah said in a statement that after conferring with its head rabbis, "and following repeated violations by the government to its commitments to ensure the status of holy yeshiva students who diligently engage in their studies ... (its MKs) have announced their resignation from the coalition and the government."

Ultra-Orthodox parties have argued that a bill to exempt yeshiva students was a key promise in their agreement to join the coalition in late 2022.

A spokesperson for Goldknopf confirmed that in all, seven UTJ Knesset members are leaving the government.

Ultra-Orthodox lawmakers have long threatened to leave the coalition over the conscription bill.

Some religious parties in Netanyahu's coalition are seeking exemptions for ultra-Orthodox Jewish seminary students from military service that is mandatory in Israel, while other lawmakers want to scrap any such exemptions altogether.

The ultra-Orthodox have long been exempt from military service, which applies to most other young Israelis, but last year the Supreme Court ordered the defense ministry to end that practice and start conscripting seminary students.

Netanyahu had been pushing hard to resolve a deadlock in his coalition over a new military conscription bill, which has led to the present crisis.

The exemption, in place for decades and which over the years has spared an increasingly large number of people, has become a heated topic in Israel with the military still embroiled in a war in Gaza.