US sanctions on Iran, rising unrest in the Middle East and North Africa and oil price volatility are dragging regional economic growth, the International Monetary Fund said Monday.

The IMF warned in a bi-annual economic outlook report that prospects for the region are “clouded by elevated levels of uncertainty”.

“Such uncertainty may increase investors’ perception of risk for the whole region, leading to capital outflows and exchange rate pressure,” the global lender said.

The IMF forecasts the economy in Iran, the second largest in the region behind Saudi Arabia, will shrink by 6.0 percent this year after contracting by 3.9 percent in 2018.

The bad news for Tehran comes after the United States reimposed sanctions last year following its withdrawal from a 2015 nuclear accord.

Jihad Azour, IMF Middle East and Central Asia director, said the dire projection was made before the US tightened up measures targeting Iran’s oil industry last week — meaning the pain could get even worse.