Iran's economy is stabilizing and will post substantially strongergrowth if the Islamic republic reaches a comprehensive deal with world powers onits nuclear program, the IMF said Friday.The International Monetary Fund estimates that Iran's economy shrank by 1.7percent in 2013, the second straight year of contraction after the United States andits allies imposed sweeping sanctions.But the IMF projects that Iran's economy will rebound by 1.5 percent in the currentyear -- even if sanctions relief under a temporary deal proves short-lived -- asTehran undertakes reforms.Masood Ahmed, director of the IMF's Middle East and Central Asia department, saidthat Iran's economic woes were "beginning to level off" but that much depends onwhether the country reaches a comprehensive nuclear deal."We do think that if there is a permanent improvement in that internationalenvironment... this should have an impact in terms of generating growth rates in themedium term that are substantially higher," Ahmed told reporters at the IMF/WorldBank spring meetings in Washington.
Ahmed said that Iran has been benefitting from foreign exchange market reformsand a dramatic calming of once-soaring inflation. But he said that Iran neededfurther structural reforms and to tighten monetary policy.Iran's new reform-minded government under President Hassan Rouhani inNovember reached a deal with six world powers to freeze its nuclear program, whichsome Western officials and Israel charge is aimed at building nuclear weapons.The United States and European powers in return offered temporary relaxation ofsanctions. But President Barack Obama has said that the sanctions would resume iftalks on a comprehensive agreement fail.