* IMF downgrades assessment from last report in October
* GDP forecast to shrink 1.3 pct in 2013 after 1.9 pct in
* But growth of 1.1 pct predicted for 2014
* Iran continuing to enjoy current account surpluses
* Inflation expected to fall this year and next
By Andrew Torchia
DUBAI, April 16 (Reuters) - Iran's economy should emerge
from a recession caused by international sanctions over its
disputed nuclear programme, but not until 2014, a year later
than previously forecast, according to the IMF.
The sanctions have hurt trade and largely frozen Iran out of
the international banking system since late 2011; analysts
believe the country's oil exports have been roughly halved.
But the International Monetary Fund said Iran was avoiding
any balance of payments crisis, in a report suggesting sanctions
remain far from having the "crippling" effect on the Iranian
economy that U.S. leaders have said they intend.
Iran has restricted access to sensitive economic data during
the nuclear crisis so analysis from the IMF, which has remained
in touch with authorities in Tehran, may be among the most
accurate available indications of the state of its economy.
The country's gross domestic product is forecast to shrink
1.3 percent this year after contracting 1.9 percent last year,
the IMF estimated in a report forming part of its half-yearly
analysis of the world economy.
That was a downgrade from the IMF's last report in October,
when it estimated Iran's GDP would shrink only 0.9 percent in
2012 and grow 0.8 percent in 2013.
The latest IMF report was prepared before Tuesday's major
earthquake that struck Iran near the border with Pakistan.
The international body forecast unemployment in Iran would
rise to 13.4 percent this year and 14.7 percent in 2014 from
12.5 percent in 2012.
But the IMF also predicted GDP would resume expanding in
2014, at a pace of 1.1 percent. This suggests the economy will
be able to find domestic sources of demand to at least partly
compensate for its damaged export industries.
The sanctions have thrown tens of thousands of people out of
work and cut living standards over the past year, but the nearly
$500 billion economy is large and diverse enough to continue
functioning in many areas, businessmen operating in Iran say.
The IMF also estimated Iran was continuing to run external
surpluses; the current account surplus, which covers trade in
goods and services, was forecast at 3.6 percent of GDP in 2013
and 1.9 percent in 2014, after 4.9 percent last year.
If these figures are accurate, they suggest the sanctions
are failing to push the country's foreign reserves down to
dangerously low levels. Many of the sanctions have targeted
Iran's balance of payments as a vulnerable area of its economy.
Iran has continued much of its trade through barter deals
and a web of front companies. It has also imposed capital
controls while a plunge of its currency, which lost about
two-thirds of its value against the U.S. dollar in the free
market over 15 months, seems to have helped its balance of
payments by deterring some non-essential imports.
The IMF predicted that the average inflation rate in Iran
would fall moderately to 27.2 percent in 2013 and 21.1 percent
in 2014, from 30.6 percent last year. Inflation began rising
sharply at the end of 2010 when the government slashed food and
fuel subsidies; since then the sanctions have added to upward
pressure on prices by weakening the currency.
"The macroeconomic environment is likely to remain
difficult, given the sharp depreciation of the currency and
adverse external conditions, which would sustain inflation at
relatively high levels," the IMF said in its report, without
commenting further on its estimates for Iran.
(Editing by Stephen Nisbet)