The International Monetary Fund said that economic performance in Iran has shown a "small contraction" because of a Western ban on purchases of Iranian oil exports.
Masood Ahmed, head of the IMF's Middle East and Central Asia Department, says Iran's economy will contract slightly for 2012 and that an increase in inflation also is expected.
IMF economists have predicted an economic contraction of 0.9 percent in Iran this year with mild growth of 0.8 percent in 2013.
Those forecasts do not take into account the sharp depreciation in Iran's currency, the rial.
The IMF says Iran's oil exports have dropped 1,250,000 barrels per day as a result of Western sanctions over Tehran's nuclear program.
Iran exported about 2,140,000 barrels of oil per day during 2011 before sanctions were tightened.
With reporting by AFP Reuters